How Can NRIs Apply For A Home Loan In India

NRIs looking to invest in real estate in India are eligible for home loans from banks and other financial institutions.They can apply for home loans for as many properties as they like in India. But in the absence of a clearly defined regulator, there is some disparity in the interest rate, tenure, and eligibility of home loans for NRIs. They are also required to be mindful of the rules and regulations of Indian banks when applying for home loans.

Various aspects that NRIs need to consider when applying for home loans in India are:

Who Can Avail A Home Loan?

NRIs, who fall under the ambit of the Foreign Exchange Management Act (FEMA), 1999, can avail home loans in India from banks and some specified financial institutions. This includes:

  • Any citizen who resides outside India for the purpose of employment, business or vocation.
  • Who has stayed in India for less than 182 days during the preceding financial year.

Purpose Of Home Loan

  • If an NRI wants to purchase a home, flat or land (other than agricultural land).
  • If he wants to do some construction of his home in India.
  • For any kind of renovation required, either for new or existing properties.

Applying For Home Loan

Different banks have different criteria for home loan application and eligibility, but general criteria have been outlined below:

1. Interested person must be within the age bracket of 18 - 60 years. Some banks also list 24 years as a minimum age for NRI applicants.
2. The applicant should have been employed abroad for at least two years or should be serving a valid job abroad since a minimum period of two years.
3. The amount of loans that can be provided depends on the bank’s prerogative and customer’s eligibility.
4. The time period of the home loan generally ranges from 5 years to 15 years.
5. Some documents are required for home loan approval, such as:

  • Passport
  • Updated visa
  • Work permit
  • Contract of employment
  • Work experience certificate
  • Salary certificate from the employer and in case salary is not credited to a bank account, then this certificate needs to be attested from the Indian embassy.
  • Statements of NRE (Non-Resident External) Account/ NRO (Non-Resident Ordinary) account.

6. It is mandatory for NRIs seeking home loans that they have granted a general Power of Attorney (POA) to a local resident or a legal representative in India who can be contacted in case of repayment of the loan.

Things To Keep In Mind While Borrowing A Home Loan

  • The banks levy a certain processing fee on the home loan along with the service tax and surcharge.
  • Only 80 - 85% of the loan value will be provided by the bank.
  • Most of the banks ask for property papers such as permission for construction, registered agreement for sale, occupancy certificate, payment receipts, share certificate in co-operative housings or conveyance deed. So, it is advised to gather all the documents in advance.

Financial services for NRIs have now evolved in their favor and banks are always keen to offer home loans for NRIs. But it is recommended that NRIs do extensive research on the services provided by various financial institutions.

It is also advised that NRIs should engage financial consultant, lawyers, or chartered accountant for compliance.