Dos And Don’ts For NRIs To Take Home Loan

For years, I have been dreaming to buy my own house in India. But for being an NRI, it remained a dream only. The robust rules of Reserve Bank of India (RBI) and distance problem were the biggest barrier in converting my dream into reality. Thankfully, the RBI has relaxed its rules due to which it became quite easy for me to take home loan. And digitization has solved the rest part of my problems. Online transaction has finally made it happen to own a house here.

What the guidelines of RBI say to NRIs?

1. Any NRI is permitted to buy property or plot for commercial as well as residential use.
2. NRIs are prohibited to buy any agricultural land, plantation property and farmhouse. If they want to own any of the foregone options, they have to take permission from the RBI.

What conditions are to be followed for home loan by NRIs?

For meeting the RBI’s criteria to get the approval for home loan:

1. NRIs should be salaried people.
2. They should have the proof of one year employment abroad.
3. If doing business or are self-employed, they should have evidence of three years of employment in foreign country.
4. Self-employed NRIs, who have office and are white collared, can get loan for home easily.
5. Indian Merchant Navy personnel can take loan for home as the NRI, if they have foreign account.
6. Any NRI more than 21 years of age can get it provided that he/she earns income and meets educational qualification criteria.
7. Assign power of attorney to the trusted relative, friend or family member.
8. The NRIs should not belong to negative location, like Africa.

What documents are needed for home loan by NRIs?

Services of NRI property management can be attainable to take credit for investing in home by showing these documents to the bank authority:

1. Copy of passport
2. Valid visa
3. Work permit copy
4. Proof of foreign residence
5. Employment contracts
6. Salary receipt
7. NRE/NRO account statement

What is the tenure of the loan for NRIs?

The rate of interest to be paid for NRI home loan is more or less similar to the rate of interest provided to the residents of India. The bank can provide it for the tenure of 15 years. This tenure can be extended to some more years if the bank authority wants to. Generally, banks believe that the NRIs have potential to repay the loan amount since their earning is much higher. 

What’s the procedure of NRI’s home loan repayment?

Basically, NRIs have to pay the down payment in Indian currency. They can choose the banking channel from NRE and NRO accounts. The EMI of the home loan can be paid through rent received from the purchased property if it is bought with the motive of investment.