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Don't you know how important a roof over your head is? This need is felt more so in a foreign country .One doesn't know when and under what circumstances one would return to one's country. Haven't you read of the Nitaqat? .This is a system set up by the Saudi Arabian Government for localization of jobs. Would you ever want to be forced out of the country you reside in and find yourself in a situation where you have no roof over your head? .Definitely Not. Then it is time to make use of that foreign currency and take a home loan so that you can get that quintessential Home. Home Is Where The Heart Belongs
What Is The Eligibility Criteria Necessary For The NRI To Qualify For A Home Loan In India?
· The NRI loan applicant has to be at least 21 years of age.
· The NRI loan seeker has to be a graduate to apply for a home loan. He has to have a minimum of three years of employment abroad or a professional qualification with one year of employment abroad.
· The loan applicant has to have a minimum yearly Income between $30000 to $42000 if he is in the USA and a minimum salary of 36000 Dirham's a year if he works in West Asia for loans with a tenor of five years and an amount of 48000 Dirham's per year if the loan tenor is between 6-10 years. This also depends on how stable the NRI's job is and how long he can procure steady employment.
· The NRI has to route his EMI payments through his NRE/NRO Accounts and he cannot use any other accounts.
· The eligibility criteria also depends on the number of dependents, the amount of assets he possesses and his major liabilities.
· An NRI is eligible to take a home loan of INR 5 Lakhs up to a maximum of INR 1 Crore. The maximum amount of loan sanctioned can go up to 5 Crores. This mainly depends on what the repayment capabilities of the NRI are and how costly the land is. The NRI can avail a loan of up to 75% of the cost of the land, or a maximum of 85% of the cost of the property or 85% of the cost of construction of the house albeit at a different tenure from the Resident Indians.
· The rate of interest offered for the NRI can be 25-50 basis points higher than those offered to resident Indians generally to cover the higher risk involved.
· While an Indian resident can avail loans with a maximum tenor of 30 years with some banks the tenor for the NRI's is restricted to about 5-15 years. Their tenor is generally lesser as they are seen to be capable of repayment much faster than a normal resident Indian.
· The repayment of Monthly Equated Installments (EMI) can only be payed through NRE/NRO Account with remittances from abroad. The repayment needs to be done in Indian Rupees.
· The down payment is made through normal banking channels or through NRE/NRO Accounts in India.
· The loan is taken against property and if it is not repaid the bank can seize the property. This keeps bad loans with regard to NRI's low. The person could disappear but since the property is in India the bank can seize it.
· Always check to see if the bank charges a prepayment penalty or not. Some banks charge 2 % on the outstanding amount and whatever has been prepaid in the last 12 months for loans taken on fixed rates.
· You don't have to wait for the next trip to India. Most of the banks have branches in Dubai, Singapore and London where you can apply for home loans. Certain major banks also have an online submission facility.
List of Documents Required In Order To Procure A Home Loan For A Salaried NRI
· Copy of a valid passport with a stamped visa.
· A valid work permit for the country he works in.
· Overseas bank account for the last 3 months showing the salary credited.
· The salary certificates and the wage slips.
· Salary certificate attested by the embassy if the salary is not credited to a bank.
· Statements of NRO/NRE accounts are usually required.
List of Documents Required In Order To Procure A Home Loan For A Self Employed NRI
· Copy of a valid passport with a stamped visa.
· The business license or an equivalent document.
· Overseas bank account statements for the last 6 months of the NRE/NRO Account.
· Profit and Loss Account and the Balance Sheet for the last 3 years approved by a chartered accountant.
· Local address proof and the power of attorney to someone in India.
Other Documents Necessary In Order To Procure The Home Loan By The NRI
· Original title deeds tracing the property for the last thirteen years.
· Agreement of sale/construction.
· Encumbrance certificate for the last 13 years.
· Receipts for payments made for the purchase of the dwelling units.
· Allotment letter from the cooperative society.
· Latest tax paid receipt.
Loan Repayment Options Available For An NRI
Step Up Repayment Facility
In this option an NRI borrower can apply for a higher quantum of loan. The repayment rates are adjusted such that the EMI rates are lesser in the initial years and are gradually stepped up with time.
Tranche Based EMI
It is a special facility offered to NRI's when they purchase an under construction property .They need to pay interest till the property is ready. Here the NRI can fix the installments they wish to pay till the property is ready. The minimum amount payable is the interest on the loan amounts drawn. Anything above the interest paid goes towards principal repayments.
Accelerated Repayment Scheme
Accelerated repayment scheme for NRI's offers a great opportunity to repay the loans faster by increasing the EMI. This basically means faster loan repayment .Here you save on interest because of faster loan repayment .An NRI can also opt for repayment of loans ahead of schedule through remittances from his NRE/NRO Account.
Taxation of Home Loans of NRI's In India
· NRI's cannot claim tax benefits in India as they have to pay tax in the nation where they work or earn.
· You need to file tax returns in India to be eligible for home loans. Only if you pay tax for income earned in India can you claim tax rebate for the home loan.
"No Loan Is Free. The Costs Are Enclosed Somewhere. It Might Even Be Coming At A Higher Interest Rate. The Devil Is In the Details".
Happy Investing!!
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