Are you looking for a spacious villa up in the Northern hills? Or a luxurious flat in Mumbai’s Southern districts? Whatever your needs may be, India’s real estate market has a lot to offer. So, it’s no wonder that more and more NRIs are currently looking for the right property and loan deals. One of the easiest ways to finance your dream home in India, if you are an NRI, is by availing home loans specially designed for you. If you’re considering a home loan for NRI in India to fund residential or commercial property, here are five things you should consider.
1. Eligible Properties
You need to make sure if the property you want to invest in is eligible for a home loan. This is because a home loan for NRI in India can only be used for buying, constructing, or renovating a house. You are not legally permitted to purchase a farmhouse, plantation, or agricultural land.
2. Required Documentation
When you apply for a home loan for NRI in India, you’ll be required to submit a long list of documents. Apart from the usual paperwork for employment and residence proof, you’ll need to provide a copy of your Passport and Visa. Banks will also demand document proofs like:
- Identity proof
- KYC documents
- Employer ID
- Proof of work permit
- NRE/NRO account details
- Notarised general Power of Attorney (POA)
- ITR for last three years
- Salary slips of past three months
However, the documents needed will vary for salaried and self-employed professionals. So, make sure you are clear on the requirements before filing a loan application.
3. Power of Attorney
Most financial institutions insist NRIs provide a Power of Attorney or POA when advancing a home loan. Typically, they will ask you to appoint a family member as POA if you don’t have a co-borrower/co-owner living in India. This person will act as your representative and handle all loan-related communication with the bank.
Thus, it is critical you only appoint someone who is trustworthy and knows how to manage legal matters well.
4. Loan Repayment
After the application process, another thing you should consider is the repayment criteria. As per the RBI guidelines, repayments for NRI loans can only happen in Rupee and through NRE/NRO bank accounts. Thus, you will also need to manage the currency exchange fluctuations.
You can deposit or remit the income you earn abroad directly into these accounts. And pay the EMIs using any banking channel.
5. Cost of Borrowing
Lastly, you should be aware of all the costs associated with an NRI home loan. Especially, since you will be dealing with cross-border payments.
Usually, these are some of the charges you’ll need to pay along with the bank loan interest:
- Processing fee
- Document registration fee
- Legal-technical valuation fee
- Stamp duty charges
- Prepayment charges
Together, these will determine the total cost of borrowing a home loan for NRIs in India. With this estimate, you’ll have a fair idea of the total amount you are spending on the property purchase, and prepare a budget accordingly.
Just be mindful of the tips shared above before applying for a home loan for NRI in India, and enjoy a seamless borrowing process!