Legal Guidelines
NRIs need to know the basic legal information required to buy property in India. Please read the following points or contact us with any more queries.
- Non-resident Indians holding Indian passports do not require RBI permission to acquire immovable property for bonafide residential purposes.
- Non-resident Indians holding Indian passports may pay the purchase consideration either by remitting funds from abroad through normal banking channels or out of NRO/NRE/FCNR accounts.
Get a copy of the title report from the property solicitor. Ensure that no conditions are written in fine print and that the state government makes no specific reservations. Look for specific clearance reports. For instance, if the construction is near a seafront, you must check for a Coastal Regulation Zone (CRZ) clearance. If the project is being constructed over or near a heritage building, you must check for any heritage reservations for the premises. The idea is to ensure that you do not get stuck with a property that is or may not get caught in any disputes. Lack of clearance of titles also means that you cannot avail of home loans.
Home Loan For NRI
Home Loan Guidelines for NRI
If you are a NRI, acquiring a home loan in India can be a complicated and confusing process. Go through the following information to understand the process of receiving a home loan. NRI's Qualifying for NRI Housing Loans are:
- Indian citizens who stay abroad for employment or for carrying on business or vocation outside India or for any other purpose in the circumstances indicating an indefinite period of stay abroad;
- Government servants who are posted abroad on duty with the Indian missions and similar other agencies set up abroad by the Government of India where the officials draw their salaries out of Government resources;
- Government servants deputed abroad on assignments with foreign Governments or regional/international agencies like the World Bank, International Monetary Fund, World Health Organization, Economic & Social Commission for Asia and the Pacific;
- State Government and Public Sector Undertakings officials deputed abroad on temporary assignments or posted to their branches or offices abroad.
Documentation required for Resident Indians, as well as for NRI, for getting Home Loans are different in some respects. Home loans for NRIs are available for the construction of new houses/flats, purchase of old houses/flat additions/ alteration to existing houses & repairs/renovations, etc. NRIs can get loans by mortgaging an existing residential property. However, to avail of home loans, NRIs have to fulfill certain conditions according to provisions of the Income Tax Act. They should have stayed in India for 182 days or more within an assessment year, or they should have stayed in India for at least a total of one year or more. The FDI Policy that permits FDI up to 100% from foreign NRI investors under the automatic route has boosted NRI confidence. Banks have attractive NRI housing schemes to accommodate the housing needs of NRI's. Housing finance plans with suitable repayment options are available from the stables of HFC's NRI. Last, NRIs should take due care while selecting their home loan provider companies or HFCs. Considering the geographical distances involved, it is significant that loan seekers associate with a proactive and responsive HFC.
Age
The loan applicant has to be 21 years of age.
Qualification
The NRI loan seeker has to be a graduate.
Income
The loan applicant must have a minimum monthly income of $2,000 (although this criterion may differ across HFCs). Eligibility is also determined by the stability and continuity of your employment or business.
Payment Options
The NRI must route his EMI (Equated Monthly Instalments) cheques through his NRE/NRO account. He cannot make payments from another source, such as his savings account in India.
Number Of Dependants
The number of dependents, assets, and liabilities determines the applicant's eligibility.
An NRI applicant is eligible to get a home loan ranging from a minimum of Rs. 5 lakhs to a maximum of Rs. 1 crore, based on the repayment capacity and the cost of the property, although variable by the priorities of the home loan provider. Also, NRIs' home loan tenures differ from those of Resident Indians. An applicant will be eligible for a maximum of 85% of the cost of the property or the cost of construction as applicable and 75% of the cost of land in case of land purchase, based on the borrower's repayment capacity. However, an NRI can enhance his loan eligibility by applying for home loans with a co-applicant with a separate income source. Also, the interest rate for NRI's home loans is higher than those offered to Resident Indians. The difference is to the extent of 0.25%-0.50%. Some HFCs also have an internally earmarked negative criterion for NRI home loans. As such, the NRIs hail from locations marked as being negative in the books of HFCs. Find it difficult to get a home loan.
RBI Directive Loans:
The Reserve Bank of India (RBI) has clarified that Non-Resident Indians (NRIs) and Persons of Indian Origin (PIOs) purchasing immovable property in India should pay for the acquisition with funds received in India through normal banking channels by way of inward remittance from outside the country.
The NRIs & Resident Indians can also acquire immovable property in India other than agricultural property, plantation, or a farmhouse. It has issued certain directives for sanctioning home loans to Non-Resident Indians. The guidelines provided are:
- The home loan amount should not exceed 85% of the cost of the dwelling unit, as the remaining 15% needs to be provided as an individual contribution towards the cost of the unit financed.
- The cost of the dwelling unit, which is financed by own contribution less the loan amount, can be met from direct remittances from abroad through normal banking channels, the Non-resident (external) [NR (E) Account and/or Non-Resident (Ordinary) [NR (O)] account in India.
- However, repayment of the loan, comprising of the principal and interest, including all the charges to be remitted to the HFC from abroad through normal banking channels, the Non-Resident (External) [NR (E) Account and/or Non-Resident (Ordinary) [NR (O)] account in India
The repayment option for NRIs is that they can pay through the funds held in any non-residential account maintained in accordance with the provisions of the Foreign Exchange Management Act, 1999, and the regulations made by the RBI from time to time. As most home loan provider companies consider the applicant's economic stability, home loans for NRIs are quite feasible because they have good economic resources.
Documentation Required For Loan:
The documentation required to be submitted by NRIs is different from that of Resident Indians, as they are required to submit additional documents, like a copy of their passport or a copy of their work contract. Of course, NRIs have to follow certain eligibility criteria to get Home Loans in India.
Another vital document required while processing an NRI home loan is a power of attorney (POA). The POA is important because, since the borrower is not an Indian Resident, the HFC would need a 'representative' in lieu of the NRI to deal with and if needed. Although not obligatory, the POA is usually drawn on the NRI's parents/wife/children.
The documents needed for obtaining NRI home loans are:
- Passport & Visa
- A copy of the appointment letter and contract from the company employing the applicant
- The labor card/identity card (translated in English and countersigned by the consulate) if the person is employed in the Middle East Salary certificate (in English) specifying name, date of joining, designation, and salary details
- Bank Statements for the last six months
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