How Can NRIs Apply for Home Loans in India| North Loop Official Blog
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27 Aug 2020

How Can NRIs Apply for Home Loans in India

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Indian real estate is one of the most globally recognized sector and a popular property investment destination for NRIs. Just like resident Indians, if you are an NRI, you are eligible to invest in any number of properties in India and also avail home loans for them if required.

Most banks and non-banking financial institutions in India offer home loans, but the tenure and interest rate may vary between different banks.

Let us understand a few points that you must keep in mind when applying for home loans in India –

Eligibility –

There are certain eligibility requirements based on age, qualification, years of employment abroad and ability of repayment when it comes to home loans for NRIs. While these requirements can vary between different banks, most of them follow a specific basic guideline such as the minimum and maximum age allowed for a home loan application is 18 and 60 years respectively.

Similarly, if you apply for the loan as an NRI, you must be employed abroad for at least two years or be serving a valid job contract for a minimum of 2 years. The mandatory income limit required for you to be eligible for a home loan in India again varies from bank to bank and also differs based on the country where you currently reside.

Based on all the above criteria and the extent of your eligibility to meet them, banks in India can offer loan amounts that go up to crores. Moreover, you must open an NRE/NRO account in India to apply and service the home loans.

You can open your NRE account within minutes with a digital platform like North Loop that does not require any documents or proofs, and carry on digital banking seamlessly and securely on its App.

Get a zero-balance, no-fee NRE/NRO account with North Loop in 5 minutes

Loan Tenure –

The tenure of NRI home loans offered by banks usually ranges between 5 and 20 years. If you are a salaried professional, it can go up to 30 years. You can opt for short-term loans to meet various purposes such as purchasing a house, building a property or even renovating an old one that you possess in India.

With digital banking and online home loan facilities available globally, you can get loans as per your requirements, all from the comfort of your home.

Interest Rate –

The annual interest rate applicable to NRI loans in leading banks of India varies from 8.00% to 8.95% with a processing fee of around 0.5% on the loan amount along with service tax and surcharge. This includes popular Indian banks like Axis Bank NRI home loan, SBI NRI loan, NRI home loan ICICI and Canara Bank NRI home loan.

Loan to Value (LTV) –

LTV is the ratio of the mortgage amount to the appraised value of a property. In other words, it is a ratio of the amount you intend to borrow as a loan to the actual amount of the property.

Based on your gross monthly income and other eligibility criteria, banks usually allow an advance of 80-85% of the value of the property. That means if the property you intend to purchase is of Rs.1 crore, you can avail a loan amount of around Rs.80-85 lakh.

Documents required –

As an NRI, you must be KYC compliant when availing home loans from Indian banks. Along with the necessary documents required for a successful KYC exercise such as valid passport and visa documents, some other documents required to apply for home loans in India include employment appointment letter, work experience certificate, work permit, contract of employment from your current employer, salary pay-slips, verified foreign address proof, NRE/NRO bank account statements, income tax return statements from the current country of residence, a valid qualification certificate and a General Power of Authority (GPA) in the bank’s format that is duly notarized.

Power of Attorney (PoA) and Co-applicant –

Most banks providing home loans for NRIs require a point of contact in India whom they can contact in case of any property or loan-related issue. That is where PoA comes into the picture.

A PoA is essentially a document whereby you can give another person authority to invest in India or make decisions on your behalf in your absence. A PoA is of two types, a general power of attorney and special power of attorney.

A GPA grants broad powers to your representative to carry out on your behalf. For NRIs applying for home loans in India, it is mandatory to appoint a GPA.

Moreover, the GPA either has to be a co-applicant or guarantor to the loan with certain exceptions. In case a local Indian resident is not available as a co-applicant, then a guarantor to the loan becomes obligatory.

Disbursement and repayment –

At the time of disbursement of the loan, it is essential for the GPA assigned by you to be present in person at the bank premises. That is because, in your absence, their signature is used by the bank on the necessary disbursement documents.

As far as repayment of the loan is concerned, it can only be done in Indian currency and get paid through an NRE/NRO account.

Conclusion –

These are some of the broad guidelines that you should keep in mind when applying for home loans in India. Along with this, you must compare the rules and regulations of the banks by checking them online on their websites and accordingly, choose the better option. Moreover, as most banks have different eligibility criteria for application, you can opt for the one that suits you the best.

To open an NRE/NRO account with North Loop, sign up now.

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This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended be advice. You must obtain professional advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax, investment or other professional advice from North Loop or its affiliates. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date. All opinions expressed do not reflect the views of North Loop nor are endorsed by North Loop.