NRI Housing Loan Guide: A Step-by-Step Process for Buying Property in India

Non-Resident Indians can avail financing assistance in the form of NRI housing loans, for purchasing residential properties in India.

Who is Considered an NRI?

According to the Reserve Bank of India (RBI) guidelines, an NRI is defined as:

• An Indian citizen with a valid Indian passport.
• Someone who stays abroad for employment, business, or vocational reasons, or under circumstances suggesting a long-term or indefinite stay.

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NRI Housing Loan – Key Highlights

Here are the salient points and useful information for NRIs regarding the process of receiving a home loan.

• The applicant must be an Indian passport holder.
• Loan can be availed for up to Rs 1 crore or 85% of the cost of the property, whichever is lesser.
• Loan eligibility is decided based on the repayment capacity of the individual. Repayment capacity takes into consideration income, age, qualification, number of dependents, other income, amounts and a few other items.
• For loans between 5 and 10 years, rates of interest vary from 7.75% to 9%.
• Repayment period ranges from 5 to 20 years or on superannuation or on completing 60 years of age.
• The loan is repaid in the form of equated monthly installments (EMIs).
• The security for the loan would be the equitable mortgage of the property financed. This is created by the deposit of the original title deeds of the property with the HFI.
• Local guarantors are also required in case of some institutions.
• Copies of the following documents have to be submitted along with the application for the loan to the institution:
  • Employment contract
  • Latest salary slip
  • Latest work permit
  • Visa stamped on the passport
  • Power of Attorney to a local individual
  • Receipt of payments made for purchase of the property
  • Agreement of Sale
• A salaried applicant should be abroad for at least a year, and a self-employed applicant for 3 years.

Conclusion

As an NRI, buying property in India through a housing loan can be a smooth and rewarding process with the right information. By understanding the loan eligibility criteria, interest rates, and required documents, you’ll be better prepared for your property purchase journey.

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Frequently Asked Questions

1. What documents are needed for an NRI housing loan?
   You’ll need an Indian passport, employment contract, salary slip, work permit, and other documents verifying your financial standing and property transaction.
2. How much loan can an NRI avail for property purchase?
   NRIs can avail loans up to Rs 1 crore or 85% of the property cost, whichever is lower.
3. How long is the repayment period for an NRI housing loan?
   The repayment period can range from 5 to 20 years, depending on the applicant’s age and employment status.