Best Home Financing Options For NRI Buyers

It’s a proven fact that purchasing a housing property has always been a hot pancake among the NRIs. Most of the NRIs buy residential properties for investment purposes, while others do for their loved ones. But, before taking a leap the buyer always needs to weigh and consider his plans throughout. Nowadays, there are diverse home loan options available that can finance your purchase. Here’s a checklist of best home financing options for NRI buyers. Let’s have a look at them.

Who is an NRI, defined by banks?

Firstly, we need to understand who an NRI is, according to the banks. As per RBI, a person who holds an Indian passport, but resides abroad for work is an NRI or Non-Resident Indian. So, people working abroad on H1, L1 and other employment visas are qualified as NRIs.

Basic reasons for NRIs to invest in the Indian Real Estate

Earn more money

You will be able to make more money from the gap between the values of currencies, as the ratio of currencies (in western countries) are stronger compared to the rupee.

Save on income tax

Another major benefit is that NRIs have to deal with registration only, without the payment of income tax.

There’s a demand

Yes, Indian folks take housing seriously. Equally, the demand is usually high for well-designed properties. So, later if you wish to sell the property or rent it out, no matter… you are going to find eager clients on the scale.

Which are the properties eligible for the loan?

Home loans can be availed for any property – ready for possession or under construction, buying a plot or construction of property on an owned land.

How the home loan for an NRI is different from one for a Resident Indian?

The second most important factor is that a loan for an NRI and a resident Indian is not the same. There are certain differences in the eligibility criteria, screening process, tenure, and interest.

• The maximum tenure is 15 years for an NRI, while its 30 years for resident Indians.
• The interest rates for NRIs are 0.2% to 0.7%.
• EMI can only be paid from NRO/NRE accounts.
• They cannot assert tax benefits on home loans.
• Above all, the screening process for NRIs is more rigorous when compared to a resident Indian.

Which are the financing sources for NRI homebuyers?

The money for purchasing a residential property in India comes through banking channels only. So, NRIs can purchase a residential asset in India, by obtaining a home loan (as Indian currencies) from banks and housing finance companies.

How much money do NRIs get through home loans?

Well, different banks have different policies, but generally, most of them follow a similar rule. Generally, NRIs can get up to 80 to 85% of the value of a property. For example, if the property is valued at say, INR 80, 000 then an NRI will get up to INR 64-68,00,000 as home loans. Equally, some banks allow the maximum amount of loans based on your income. Also, may banks will check out your visa status, location, type of job, other debts, income history, age of employment etc when deciding the amount of loan to be allowed.

How can NRIs obtain a home loan?

The application procedures can be made online, as well as offline. Equally, the nature of documents that needs to be submitted will depend on whether the NRI is self-employed or whether he is a salaried employee.

Documents required

The documentation required for NRI home loans are the copies of passport, work permit, valid visa, contract of employment, salary certificate, work experience certificate, statements of NRE/NRO accounts. For people residing in the Middle East, a copy of the employment card is also required.

List of methods to service the home loan

EMIs on the home loans can be paid through remittances from outside India by the NRIs – either through a proper banking channel or by debiting the NRE/NRO/FCNR account. In case, if the asset is buy-to-let, an NRI can use the rental income to pay off the loans. Equally, if the property is purchased for self occupancy, he/she can avail a loan against the FCNR/NRE account deposits for servicing the home loan. The amount allowed is up to Rs 1 crore.

Tips to bear in mind while purchasing a property in India

For NRIs, buying a property in India can be a great tax-saving tool. But you have to adhere to certain rules before getting one.

• It is suggested, that you know the nature of the property before purchasing it.
• Before making the purchase, you may examine the legal documents first.
• Also, make sure that the original title deed bears the name of the seller. This can avoid potential pitfalls to your property.
• Before signing any documents, you need to seek the counsel of an attorney.
• Equally, as an NRI, you will be able to claim a maximum deduction of Rs. 2,000,000 instead of interest paid on a home loan.

So, start investing today!

Finally, I would say investments might sound scary initially. But, if you invest in the right property you will benefit a lot in the long run. At the same, getting a home loan is quite a straightforward process – if you are thinking of getting a house in your own country. Go through the home financing options listed; evaluate them as per your needs and make a decision.