Buying property back in India is undoubtedly the most sought-after investment option for Non-Resident Indians (NRIs). With the option of home loan available for NRIs, they can easily avail it instead of using their foreign currency, especially when Indian rupee is weakening against the US dollar. Home loans to NRI are offered by banks as well as Non-Banking Financial Companies (NBFCs). However, there are several issues that play on the mind of NRI investors but the most serious concern is the legal and financial nitty-gritty of buying a property. While these might seem like hurdles but with careful planning and research, property buying process can be eased and smoothed. To take some pressure off from the potential buyers, find below some of the nuances and formalities essential for acquiring home loan by NRIs.
Home Loan Eligibility criteria for NRIs
Though there is not much difference in the eligibility criterion between the resident Indians and NRIs but still more emphasis is given on the following criteria:
- The criteria of minimum age limit for NRIs are 18 years with State Bank of India and it is 25 years with ICICI Bank.
- The NRIs should be employed abroad at least for 2 years.
- The NRI applicant should possess graduate degree.
- ICICI and Axis banks have a minimum salary per month as one of the eligibility criteria. NRI working in gulf countries need to have minimum income of 5,000 AED and NRIs working in US or other countries must have monthly income of $3,000.
NRI applicants need to provide few documents for successfully availing home loans from banks or financial companies. For the documentation process, NRIs need to submit the following documents:
- Passport & Visa
- Three to six month salary slip or certificate
- Personal bank statement for last six month
- Appointment letter
- Employment contract
- Address proof
- Processing fee cheque from NRE account
- Power of attorney if not in India
- UK and U.S applicants need to produce credit report
NRI home loan tenure with banks like SBI and HDFC is same as resident Indian i.e. 20 to 30 years. However, home loan tenure in some banks is restricted to 10 to 15 years only. NRI having professional qualifications are entitled to 15 year home loan term and for others it is 10 year term with banks like Bank of Baroda and LIC Housing Finance Ltd.
Earlier there were differences in the interest rate charged on home loans for resident Indians and NRI but now the interest rates are same for both. Even other charges like processing fee for NRI home loans are same. The average home loan size for NRIs is 40 lakh compared to 23.5 lakh for resident Indians. The processing fee is 0.5% of the loan amount, which is capped at Rs. 10,000. Ceiling on the processing fee allows NRIs to take bigger amount as loan.