NRI Home Loan: Are you eligible?

NRI Home Loans

Over the last few years, Indians settled abroad, otherwise known as NRI have invested heavily in India’s real estate market. This is because they earn in a stronger currency and pay in rupees. To enable them to buy properties of their choice, the government allows them to avail loans. So, what are the exact terms which you need to fulfill to get bank loans as an Indian living abroad?

As per the existing rules of the Reserve Bank of India, any Indian citizen who holds a valid Indian passport and resides abroad for employment purpose or to carry out business over an uncertain period of stay is a non-resident Indian. So, people eligible for home loans include working professionals and businessmen as well as diplomats posted in other countries as well as those serving in international organizations like IMF and World Bank.

Home loans are sanctioned for properties that are under construction, renovations to existing property as well as the ones that are ready for possession. However, NRIs are not allowed to buy agricultural land. Qualifications, as well as income, play a great role in deciding the highest amount which you can borrow from a bank. Usually, financial institutions provide 80-85% of the loan, depending on the gross monthly income (GMI) of the person. The maximum amount of money that could be sanctioned in your name is around 36-40 times more than your GMI. Some of them also follow the ratio of EMI to your Net Monthly Income.

The period during which an NRI can avail loans is between 5-15 years. Extensions below 15 years are provided under exceptional circumstances only. However the rates of interest that you will have to pay as part of the remittances are higher. Banks usually charge 0.25% – 0.50% as interest rates. The documentation process which you will have to undergo is different from that meant for residents. You will have to submit copies of your passport and valid VISA and work permit, certificates confirming your work experience, contract of employment, salary certificate, as well as statements of NRENRO. If you are settled in the Middle East, then you will also need to submit a copy of your employment card. In cases where 1your salary is not credited to a bank, then your salary certificate will need to be attested by the Indian Embassy at the country of your employment.

NRIs can make repayments in Indian rupees through your NRE (non-resident external) or NRO (non-resident ordinary) accounts with remittance from the country where you reside. You can use no other funds to make repayments. In the event of a change in your status from NRI to resident, the loan will be reworked on the basis of your changed income as well as the tenure and applicable rates of interest charged.

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by Balaji R via Shriram Properties