NRIs too can avail home loans

A non-resident is eligible for home loan for property purchased in India. There are slight differences,however,in the eligibility and tenure

NRIs too can avail home loans for purchase of residential property. They can purchase a house and can even take loan for self-construction on a plot and also for renovation/improvement of an existing residential property in India.

Like resident Indians,NRIs can avail up to 80-85 per cent of the cost of residential property as a home loan. However,the down payment should be directly remitted from abroad through normal banking channels or from non-resident external NRE account and/or non-resident ordinary NRO account in India. EMI payments too should be remitted from any of these accounts.

In the case of NRIs,however,there is a stress on certain pre-requisites such as qualifications,current job profile,past experience,probability of continuing abroad for the loan tenure and probability of servicing the loan with an extended tenure in case of return to India. The Loan-To-Value LTV ratio for NRI customers varies from one bank to another,though the manner of calculation is the same in case of a regular home loan.

The income taken into account for calculating the home loan eligibility is the repatriable income plus any income in India. For NRIs working in countries that restrict repatriation such as African countries,only the repatriable portion of the income is considered for calculating loan eligibility.

Though the regular home loan tenures can be up to 25 years,loan tenure for NRIs is normally 10-15 years. Along with the standard documents required for a home loan,NRIs need some additional documents such as the appointment letter and contract,labour card if employed in the Middle East,salary certificate,bank statements and income tax returns filed in the country of residence.

Loan eligibility can be enhanced by taking a joint loan with relatives. However,for certain reasons banks allow only a select list of relatives to be joint owners of the property.

It is important that NRI provides General Power of Attorney POA in favour of a trustworthy relative as per the draft of the Bank which should be duly attested by the Indian consulate in the country of residence. In case the loan borrower is in India,the POA can be locally notarised. Most banks require the POA to ease the process of dealing with the NRI borrower. The POA holder only gets the powers that you give and does not have the power of dealing with the property.

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Like resident Indians there are certain tax benefits too for NRIs on interest payments which can be useful if they have any taxable income in India.

The author is chief editor,Apnapaisa.com