If you are a Non-Resident Indian (NRI) looking to avail a home loan in India, below given are few things for you to keep in mind while applying.
Documents Required for NRI Home Loan
1. Passport and visa forms as part of the Know Your Customer (KYC) exercise
2. Details of your permanent address in India
3. Salary certificates and statements of Non-Resident External (NRE) and Non-Resident Ordinary (NRO) accounts supporting these are also required.
4. Deputation or appointment letter, work experience certificate, work permit and contract of employment.
5. Foreign land address proof, verified by your employer (i.e. over mail), together with the tax return statements from the overseas land.
6. To ensure loan eligibility, you will have to present a qualification certificate. Also, General Power of Authority (GPA) in the bank's format should be duly notarized.
Co-Applicant for NRI Home Loan
A co-applicant and General Power of Attorney (GPA) is mandatory for NRIs applying for a home loan in India. A GPA holder either has to be a guarantor or co-applicant to the loan, with certain exceptions. The guarantor to the loan is an essential when a local resident is not available as a co-applicant.
Eligibility for NRI Home Loan
Your education qualification and level of income play a critical role in deciding the eligibility for a loan. Graduation is the minimum qualification for an NRI in order to apply for a home loan. The basis of eligibility is to know if you are on deputation or have been employed for good in the foreign land. As well, the income for eligibility can include both repatriate income and that earned in India. Banks in India take into account the net income (i.e. income left after paying taxes overseas) when deciding on eligibility.
Minimum Income Norms
These norms differ from bank to bank. For instance, in many banks, $24,000 a year is considered the minimum income level for United States-based NRIs.
Tenure for NRI Home Loan
The tenure of an NRI home loan is brief than that of a regular home loan because the repaying capacity of NRIs is meant to be stronger than that of an Indian resident. For the most part, banks give a home loan to NRIs for a period of 15 years.
NRI home loans’ interest rates are the same as regular home loans.
Repayment & Disbursement
The payment of the loan has to be done in Indian currency and can be paid only through NRE or NRO accounts with remittance from abroad. In case of NRIs, the probability of bad loans is not high, as the property is in the native-born land and can be seized by the bank at whatever time. What many NRIs do not know is that the GPA holder has to be present in person, on the bank premises, at the time of disbursement of the loan. His signature is compulsory on disbursement documents since the chief applicant is not in person present in India.
Process of Appraisal
The appraisal of loan for NRIs is done through their official email address. All the details relevant for evaluating the loan is considered and confirmed over email. The employment of the applicant overseas is double-checked with his/her employer. You should notify your human resource department in advance to circumvent any hold up in the loan appraisal. The department can also receive a call to verify designation, the purpose of transfer, employee code, etc.
Unless an NRI file return and become eligible to avail of tax rebates available for such loans, there are no tax benefits for NRI customers taking a home loan.
By Sowmya Sangam