Sunday, April 30, 2017
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Home loans for NRIs

Non Resident Indians (NRI ) can take loans for building a house or for buying a plot or house in the country. 

Every bank follow the RBI guidelines to define NRI, "An Indian citizen who holds a valid Indian passport and who stays abroad for employment or for carrying on business or vocation outside India or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad is a NRI."

Interest rates for NRI loans do not vary much from that of the Indians living in this country.  But the loans will be sanctioned only for a shorter period. NRIs will get only 85% of cost of home as loan amount. The size of the loan depends upon the borrower's repayment capacity.  Up to 36 times of the gross monthly earnings of the applicant may be issued as loan.  However, there is a maximum limit. Calculation of eligibility is same as that of Indians living in the country. 

For an amount of Rs. one lakh, the following is the approximate rate of EMI to be payable. 

Period Rate *EMI
5 years
07.50%
2004.00
10 years
08.00%
1212.70
15 years
08.00%
955.00
20 years
08.25%
850.80

* EMI (The amount to be repaid to the bank every month)

As the NRI is living far away, banks have to take greater care and therefore they will ask for more documents for ensuring their eligibility for issuing loans.  They include

  • Passport and Visa

  • A copy of the appointment letter and contract from the company employing the applicant.

  • The labour card/identity card (translated in English and countersigned by the consulate) if the person is employed in the Middle East

  • Salary certificate (in English) specifying name, date of joining, designation and salary details.

  • Bank Statements for the last six months

Property Documents:

  • Original title deeds tracing the title of the property for a minimum period of the last 13 years.

  • Encumbrance Certificate for the last 13 years.

  • Agreement of sale /construction, if any.

  • Approved plan / license.

  • ULC clearance /conversion order etc.

  • Receipts for having invested the margin money through normal banking channels from the Non-Resident ( External ) account in India and / or the Non-Resident ( Ordinary ) account in India.

  • Latest tax paid receipt.

The re-payment can be made as equated monthly Installments (EMI) through Non - Resident Ordinary (NRO) account or the Non Resident External (NRE) Account. 

For security, most banks insist that the first mortgage of the property should be in their name. If the property is under construction then adequate additional security is required such as guarantee of third party (either resident or non-resident).

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