NRI Home Loan

Owning a house in India often holds sentimental value for many Non-Resident Indians (NRIs) living abroad. It can also be a matter of pride and comfort, knowing that one has a home in their homeland. However, in the past, securing a home loan for an NRI used to be a cumbersome and prolonged process, deterring many from investing in property there. But things have changed now. With the advent of digital advancements in the lending sector in India, applying for an NRI home loan has become much simpler and can be done online now. Furthermore, modern NRI housing loans offer features such as minimal documentation, flexible repayment options, quick fund disbursement, and much more, making it a borrower-friendly financing option. However, there are certain things you should be aware of before initiating your loan application. These may primarily include NRI home loan interest rates, eligibility criteria, applicable fees, tax benefits, and other pertinent features. Thus, Urban Money provides a detailed overview of NRI home loans that every NRI should be familiar with.

Feature & Benefits of NRI Home Loan

The following are the features and benefits of an NRI housing loan:

• Multi-Purpose Loan: NRI home loans can be used for various property-related requirements, including purchasing, constructing, and renovating an existing property.
• Higher Loan Amounts: Eligible applicants can typically secure a loan amount up to 90% of the property value.
• Flexible Loan Tenure: The maximum loan tenure you can avail of for an NRI housing loan is 30 years, allowing you to reduce the monthly repayment (EMI) amount.
• Competitive Interest Rates: The interest rate you can expect in a mortgage loan for an NRI typically starts as low as 8.60% per annum, ensuring a more affordable financing option.
• Easy Application Process: Since the entire application process can be done online, you can complete your loan application within 20 to 30 minutes, making it more handy and quick.
• Tax Benefits: You can also enjoy several tax benefits associated with an NRI mortgage, making it a more appealing financing option.

Types of Home Loans for NRIs

Let’s take a look at the types of mortgage loans for NRIs:

• Home Purchase Loans: A type of loan that provides funds to buy residential properties, such as flats, bungalows, row houses, etc.
• Home Construction Loans: These loans allow you to build a new house on the property you own, enabling you to construct a house that matches your needs and aesthetics.
• Land Purchase Loans: Loans are also available to purchase a piece of land or plot, and you can build a house on it when you are ready.
• Home Improvement Loans: Such loans are exclusively crafted for those who already own a house but require renovation or extension.
• Balance Transfer Loans: NRIs can also transfer their existing home loan from one bank to another that offers lower interest rates and better terms.

Purpose of NRI Home Loan

Non-resident Indians (NRIs) often seek to purchase residential property in India for various purposes. Thus, an NRI Home Loan can serve as an ideal solution to secure the necessary funds to turn their dreams into reality. The following are the most common purposes for availing of these NRI loans:

• Investment purposes
• Retirement planning
• An emotion/desire to own a home in their home country.

NRI Home Loan Interest Rates

Let’s take a look at a list of NRI home loan interest rates offered by various lenders in India.

NRI Home Loan Documents Required

The following are the documents required for NRI mortgage loans:

• KYC Documents: PAN Card, Aadhaar Card, Passport, Voter ID, or Driving License.
• NRI Documents: Work/Resident Permit, Social Security Card, Green Card, etc.
• Income Documents: Payslips, Bank Statement, Income Tax Returns, etc.
• Property Documents: Title Deeds, Buyer Agreement, Receipt of payment made to the developer, etc. (applicable in case the property is identified)

NRI Home Loan Eligibility Criteria

The eligibility criteria regarding a mortgage loan for NRI applicants are as follows:

• Profile Type: Applicants must be Non-Resident Indians (NRIs) or Persons of Indian Origin (PIO).
• Age Requirement: Applicants must be between 21 and 65 years old.
• Net Monthly Income: Applicants must have a stable and regular source of income that covers the loan repayment.
• Work Experience: Applicants must have a minimum overseas work experience of six months with a total work experience of 2 years.
• Credit History: Applicants must have a good repayment record and a CIBIL Score.

Fees and Charges for NRI Home Loan

Following are the applicable fees and charges of an NRI Home Loan:

• Processing Fees: Charged for processing your home loan application, typically spanning up to 3% of the loan amount, depending on the chosen lender.
• Foreclosure/Prepayment Charges: Levied as a penalty if a borrower repays the full loan amount before the term’s end, generally ranging from 0.5% to 2% of the prepayment amount.
• Late Payment Charges: Also known as penal interest, applicable when defaulting on EMIs. The typical penal interest for an NRI housing loan can be up to 24% p.a. on the delayed amount.
• Legal Fee: Charged for the legal verification of the property. Lenders typically appoint a legal expert to verify all legal documents related to the property.
• Stamp Duty: A tax paid to the state government when purchasing a new property. Generally, this rate varies by state and is calculated as a percentage of the property’s market value.
• Other Charges: These may primarily include conversion fees, cheque bounce charges, amortisation schedules charges, administrative fees, etc. Thus, it is advisable to scrutinise the terms and conditions of your chosen lender before finalising any decision. Alternatively, you can rely on a Fintech platform like Urban Money, where you can view a detailed overview of multiple NRI loans offered by leading lenders across India.

Tax Benefits of NRI Home Loans

Tax benefits you can expect by availing of an NRI home loan include:

• Section 80C: Up to Rs. 1.5 lakh per annum on the principal repayment.
• Section 24(b): Up to Rs. 2 lakh per annum on the interest payment.
• Section 80EE: Up to Rs. 50,000 per annum extra deduction for all home loan expenses, including principal and interest payment.