Home loan schemes make the ownership of property much easy for all of us. Be it NRIs or Resident Indians, home loans are beneficial to all. But is there any difference between loans for NRIs and RIs?
NRI home loan market is still at nascent stages but growing rapidly. Although subject to certain conditions, NRI home loan is not difficult to get.
The first thing to take note is the classification of a person as an NRI. All lending agencies, follow the rule book of the Reserve Bank of India which has clear definitions of an NRI. According to the RBI, any person who resides outside India lives in India for 182 days or less in a year and holds an Indian passport is an NRI.
Eligible Properties –
Be it a resident Indian or NRI the kind of property eligible for a home loan remains the same. It can be a plot of land, apartment, construction related loan or for renovation, both sets have similar rules applicable to them
Mortgage Eligibility Criteria
This is where the maximum difference is seen. All lenders, banks or NBFCs have their own set of norms for the loans they distribute. NRIs can expect around 75% loan amount out of total value of property. But how they arrive at the maximum loan amount is different. Some lenders use gross monthly income as a guide rule to offer, say 40 times of the amount as maximum loan amount. But other lenders prefer net monthly income to decide how much loan should be disbursed.
While it is relatively easy for resident Indians, to get through the screening process, for NRIs the filtering process is quite detailed. Lenders take a hard look at educational documents and salary or income records to take a call on the home loan.
Tenure of home loan
There is also a difference in respect to home loan tenure for NRIs and resident Indians. A resident can get a loan period of up to thirty years whereas for an NRI, the period is quite less usually with a maximum ceiling of fifteen years. However, this can be increased as per discretion of the lender.
The interest rates for NRI home loans are little on the higher side then loans for resident Indians. The increment could be anywhere from .20% to 0.70%.
Due to the nature of the loan, NRI home loans require extra documents including visa papers, passport copies, employment or business papers and statements of NRO or NRE accounts as applicable. In some cases, salary slips might have to be attested at the local Embassy where NRI is residing.
Repayment of loan
NRIs must remit money as per regulatory framework in place. All loan payments or down payment shave to be done through Non – Resident Ordinary or External Accounts.