Did you know that NRIs too can purchase a home in India? Non-resident Indians can leverage financing schemes to fulfill their dream of having a home in India. This blog will discuss everything about NRI home loans, eligibilities, criteria, and more. But before we proceed further with this, let’s understand who NRIs are.
Who are NRIs?
NRIs, or Non-Resident Indians, are individuals who stay outside of India for work, property, or business. Anyone spending less than 182 days in India in the last financial year is considered an NRI. Those who go abroad for study, business visits, or medical treatment aren’t considered NRIs.
What are the eligibility criteria for NRI home loans?
NRIs who need home loans to buy a residential flat in India, needs to be eligible. The eligibility criteria set by banks are as follows:
- NRIs applying for a home loan should be a self-employed or salaried person.
- NRIs can apply individually or with a co-applicant who may or may not be a co-owner of the flat or plot.
- NRIs may opt for a home loan for under-construction homes, resale homes, or construction of new homes.
Documents NRIs need to provide for a quick home loan approval
NRIs need to provide the following documents for a home loan in India.
- Copy of a valid passport & visa
- Proof of identity, income, and residence
- Copy of buyer agreement or agreement to sell (if property is finalised)
- Copy of property allotment letter
- Processing fee cheque
- Power of attorney (if applicable)
- Passport size photos of all applicants
What are the loan repayment options for NRIs?
NRIs can access several options to repay their home loan. These are as follows:
Repayment via postdated cheques or (PDCs)
NRIs can repay their home loan via post-dated cheques (referring their NRE/NRO accounts).
Repayment via an NRE or NRO account
Non-resident Indians can repay the home loan by depositing funds in an NRE or NRO account. They need to set up standing instructions for regular home loan repayment.
Repayment via ECS (Electronic clearing services)
Non-resident Indians can pay back their home loan EMIs via ECS where payment is deducted automatically from their NRE or NRO accounts.
How much interest rate is charged on home loans for NRIs?
The rate of interest for an NRI home loan varies from bank to bank and depends on several factors, such as loan tenure, amount required, market conditions, and the borrower’s credit history. It’s always better to compare home loan interest rates before making a final decision.
Home loan tax benefits for NRIs
Just like Indian residents, NRIs too can enjoy certain home loan tax benefits. They can claim deductions of home loan interest rates paid under Section 24 (b) of Income Tax Act. They can also claim the deductions against principal paid under Section 80C.
Conclusion
Non-resident Indians can also buy a home in India and get a home loan for it. A thorough understanding of eligibility criteria, interest rates, repayment options, documentation, and tax deductions can help them make the best decisions.
