Many NRIs who wish to buy a home in India find it hard to get a home loan. Read on to know about the essential things you should know about applying for a home loan in India.
Many Non-resident Indians or NRIs who live overseas wish to invest in a real estate property in India to stay connected to their family or settle down in their native land after retirement. Irrespective of the reason for buying a home in India, NRIs can get the desired funds by availing of an NRI home loan.
Many lenders, including nationalised banks and non-banking financial companies, offer special home loan offers for NRIs. However, as an NRI, if you wish to apply for a home loan in India, you must be aware of the eligibility requirements, the process involved, documents required, etc. If you are a first-time home loan applicant, the following tips will help you through the NRI home loan process.
What is the home loan eligibility criteria for NRIs?
The eligibility for an NRI home loan varies from one financial institution to the other. But, generally, most Indian lenders have the following criteria:
- You can get a home loan to buy a new house or construct your own house on the land you own.
- You must be a self-employed professional or salaried employee and have a steady source of income.
- You can apply for an NRI home loan either individually, or you can opt for a joint home loan with one or more co-applicants. The co-applicants must be NRIs too. Also, all the property co-owners need not contribute towards the loan repayment, but they must sign the loan documents.
What are the necessary documents for getting an NRI home loan?
The documentation varies from lender to lender, but some basic documents required include:
- Identity proof
- Address proof (both in India and country of current residence)
- Copy of valid passport, visa, work permit
- Passport-sized photographs
- Income proof
- Property-related papers
- A check to pay the loan processing fee
What is the interest rate for NRI home loans?
In India, most lenders give you the flexibility to avail of a home loan with a fixed interest rate or flexible interest rate. If you choose a fixed-rate NRI home loan, the interest remains fixed throughout the loan tenure. Whereas, inflexible interest rate home loan, the interest rate varies based on the existing market condition.
However, many experts recommend choosing a home loan with a flexible interest rate as it tends to be cheaper in the long run. You must also know that in inflexible interest rate loans, even though the interest charged may vary, the EMI amount remains the same.
How much loan can NRIs avail?
Most lenders in India provide 75% to 90% of the property’s value as a home loan for NRIs. You must fund the remaining amount from your pocket, and it should be paid upfront. This is called a down payment, and it is an essential part of the home loan application process.
Do NRIs get tax benefits on a home loan?
Yes, as an NRI, you can get tax benefits on a home loan provided you file your tax returns in India. Under Section 80C of the Indian Income Tax Act, you can get tax benefits up to a maximum limit of Rs. 1.5 lakhs per year on the repayment of the principal amount. You can also get a tax deduction of up to Rs. 2 lakhs on the interest repayment.
Apply for an NRI home loan and make your dream of being a homeowner come true
Today, as many lenders offer NRIs home loans, getting the funds has become easier than ever before. Before you start the home loan application process, you should do your due diligence about NRI home loans to make an informed and better decision.
