NRI Home Loan – An Overview

It is a common trend among NRIs to think a lot before investing in a property in India and this is mostly due to the challenges faced during research and planning, and in some cases shortage of funds. To aid such individuals in need most banks provide NRI home loans .

Purposes served by NRI home loans

This type of loan generally serves the following purposes-

* Aids in constructing a property on a plot of land by an NRI

* When a plot of land is allotted by a society/development authority, the loan provides funds for the purchase

* An existing property in India may also be renovated or improved using this loan

* Finances the purchase of a house under construction or one which is being resold

* Provides funds for buying an existing house or flat

* Providing funds to NRIs for buying a second house, but under the condition that the NRI uses it for self-occupation upon his/her return to India

Difference between a normal home loan & home loan for NRI

In India, a home loan can be obtained easily and conveniently. This applies for both Indian citizens as well as NRIs. The basic differences between them are however as follows:

* Interest rate- Home loan for NRIs prove to be more expensive than Indians residing in the country. Usually, the NRI loan applicants have to pay 0.25% to 0.50% more than their Indian counterparts.

* Loan amount- The bank finances only 85% cost of the property for NRI borrowers, which is lesser than the amount granted to normal home loans.

* Tenure- Normal home loans in India have a tenure extending up to a maximum of 30 years whereas NRI home loans have a short tenure within a range of 7 to 15 years.

* Tax benefits- NRIs are not eligible to claim tax benefits under the amount they pay for repayment of their loan. However, if they pay tax in India for income earned in this country, amount paid against home loan repayment may be used for tax deduction.

Documents needed for applying for a NRI home loan

The mandatory paperwork requirement for getting a home loan for NRI approved is as follows:

* Employment Contract or Labour Contract
* Identity card / Labour card
* Work permit
* Passport stamped with resident visa
* NRE or NRO statement for the last six months and an overseas bank account
* Continuous Discharge Certificate (CDC)
* Latest Credit Bureau Report

Procedure for applying:

* People from gulf countries may directly apply through offices in Dubai, Oman, Qatar, Kuwait and Saudi Arabia

* Customers residing in the United Kingdom and Singapore may apply through offices located in London and Singapore respectively

* NRIs from other countries need to give a power of attorney to a person based in India for applying