Indian real estate market is attractive for Non-residential Indians because they get a chance to earn in stronger currencies and invest in Indian rupees. Besides, they can easily avail a home loan from Indian banks to buy a home in India. According to the Foreign Exchange Management Act, 1999, whoever comes under the definition of this act can apply for a loan in India. Thus, NRIs can get a loan for buying property in Indian without being physically present. Whether you want to buy a house for your loved ones for investment purposes, here are the things you must consider before availing a home loan for NRI.
You need an Indian co-applicant who will be the co-borrower for the NRI home loan. The minimum age of an NRI or Non-residential Indian has to be 24 years to be eligible to apply for a home loan. Apart from that, the NRI needs to submit his or her salary slips from the last three months along with the bank statements of the salaried account to the lender.
You don’t need to come to India as the whole procedure can be done online. Otherwise, many banks have branches in other countries like Dubai, London, Singapore, etc., where you can visit physically to submit the documents
NRIs are required to submit documents like salary statements of either non-resident external or NRE account or non-resident ordinary or NRO account, valid visa, work permit, passport, contract of employment and work experience certificate. If your salary is not credited in a bank, then you need to submit a salary certificate that is attested by the embassy.
Along with that, you need to give a power of attorney to a relative or friend who lives in India and submit an Indian address. This is mandatory as the bank will reach the person who has a power of attorney, in case there are any issues regarding the repayment of your loan. Also, you need to provide a permanent address in India.
Eligibility of home loan for an NRI depends on various factors like credit score, job profile, disposable income, employer profile, etc. Those NRIs who live in countries where they have restrictive repatriation policies then lenders only consider their repatriable income while evaluating loan eligibility. Further, some lenders consider an NRI’s education qualification and even the time span that he or she has spent overseas.
You should also consider your credit card usage of last six months before availing a loan. Usually, a credit score of above 750 is considered best for a home loan approval. By fetching your credit card details, you will be able you know if you are eligible for a loan or not and can make improvements accordingly.
Tenure and interest rate
Lenders can offer you a loan for a tenure of 30 months, depending on your age. Profession and repayment capacity. Some banks provide shorter tenures from 10 to 20 years for depending on their academic qualification and country of residence. Always estimate your repayment tenure depending on investment commitments and the repayment capacity and don’t go for an aggressive repayment plan to lower your interest rates.
On the other hand, the interest is the same for the NRIs as any other residential Indian. But some banks may apply higher interest rates in case of NRI candidates as higher risks are involved. Depending on the lender, you can get charged with either floating interest rates or fixed interest rates. Apart from that, some lenders may offer fixed interest rates. In that case, they also impose higher interest rates.
The loans can be repaid only through NRO or NRE account through remittance from a foreign country. Apart from that, any other account can not be used for the repayment of NRI home loans as the repayment needs to be made in Indian currency. You have to make the down payment with NRE or NRO account as well. You need to apply a home loan for your property in India, so in case you fail to pay back, then the bank will claim your property.
You can also make repayments to save interest costs. If you feel that you are saving more money by investing the same amount somewhere else than making a prepayment, then you should go for it.
Being an NRI, you need someone who can be your power of attorney as it is one of the most essential steps for your loan approval. Also, don’t forget to check that if your bank charges any prepayment penalty and go through the terms and conditions thoroughly. Hence, if you want to buy a property in India, then you can apply for a home by following the steps as mentioned above.