Home Loans for NRIs
Non Resident Indians:-
People from India have moved to different corners of the world to work for different organizations, study or business purpose. These organizations include MNCs, branches of Indian government companies abroad, government bodies of UNO etc. People who are living abroad for certain period of time for purpose of employment or business or studies while he/she holds citizenship of India can be called as NRIs or Non Resident Indians. IT department, RBI and other government bodies of India have standardized a definition of NRI for the purposes like accountability, applicability of plans and schemes etc.
According to the definition stated by government bodies NRI is a person who is abroad for a minimum period of 182 days in a financial year or for a minimum period of 365 days in 4 preceding financial years. This definition makes a perfect reference to all financial institutions and related government bodies.
Conditions for an NRI in home purchase loans:-
The following basic criteria have to be fulfilled to avail a NRI home loan:
- Type of Property
- A bank or financial institution that is authorized by NHB (National housing bank) can provide loans to NRI to purchase, construct, extend or renovate a house. This loan cannot be granted for purchase of agricultural land, plantation or a farmhouse.
The housing loan can be availed with as much ease as that by an Indian citizen who is resident of India.
Security
The equitable part of the property proposed to be purchased/constructed/renovated will be mortgaged as security for loan. If required other property of the borrower may also come under this as security.
Repayment
The repayment of loan is to be made through renting of house purchased (in India) or through credits received through normal banking channels or by debits to his NRE, FCNR and NRO accounts.
Account and status
The borrower must own an NRI account to get NRI home purchase loan. The initial proceeds have to be received from normal banking channels and cannot be made in foreign currency or traveler’s cheques.
Apart from above conditions the financial institute may have set of criterion to provide home purchase loan. For e.g. ICICI has set the condition that NRIs applying for home loans should be a diploma holder or a graduate with a minimum of 3 years of employment abroad. For professional the minimum employment period should be 1 year.
General features and conditions:-
Depending on the bank that provides loans, features and conditions may vary. But all banks are bound for the conditions of NHB that are mentioned above.
Eligibility based on income: The banks mention certain minimum income of the applicant in order for him to be eligible for NRI home loan. For ex: SBT- income of applicant should not be less than Rs 10000 per month.
Age limitation: Minimum age of 21 years and maximum age of 60 (for salaried) / 65 (for self employed) at the time of loan maturity.
Interest rate: The interest rate on NRI housing loans is slightly higher than those of Resident Indians. At present loans are 0.25% - 0.50% higher and are between 10.75% and 12%. Interest rate depends on principal amount of loan and tenure.
Tenure: As per the RBI directive the loan tenure offered to NRIs is between 7 years to 15 years. However, the loan tenure cannot exceed the age of retirement which is plugged at 60 years.
Loan amount: The loan amount sanctioned is lower than those of resident Indians. The Resident Indians are offered almost 90% of the cost of the property whereas the NRIs are offered only 80-85% of the cost of the property. Some of the banks have a maximum and minimum limit for the loan amount sanctioned to NRIs. For e.g. ICICI has set a minimum limit of Rs.5 lakhs and maximum of Rs.1 crore for NRIs.
Tax: NRIs are not eligible for any tax deductions in India as they are liable for tax in the country that they work in. However, they have to file returns in India to be eligible for a housing loan. If they have any income arising in India, they will have to pay taxes on the same and subsequently enjoy tax rebates on the housing loan. All deductions and exemptions will be similar to that of an Indian citizen who is resident of India.
Documents required for NRI home loan:-
- Photocopy of a contract document of employment with authorized signatory of employer.
- Proof of income like salary certificate
- Proof of identity in employment
- Documents related to property and bank statement from an NRE/NRO account of applicant
- Photocopy of passport and visa.
- Depending on the bank, applicant and country of residence banks may demand for other documents like CDC, work permit etc.
NRI home loan providers in India:-
- ICICI
- HDFC
- SBI
- SBT
- CITI bank
People stay away from homeland and lead life with backbreaking jobs to make money; the dream home behind their eye lids can gain life by housing loans provided by banks in India.
Contributed By: Aruna Sharma |
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Mrs. Sharma holds a Masters in Financial Management from University of Mumbai. She has graduated from the University of Mumbai. | |
