A basic overview of housing loan for NRI.
Posted by Anurag Mishra on July 28th, 2017
If you’re an NRI looking to invest in property back home, it’s a good decision. Real estate prices are always risings and property can prove to be a good investment opportunity. If the country you reside in presently has a better currency value than the INR, then the decision becomes all the more lucrative. However, property in India is anything but affordable, and if you’re looking to go in for home loan, then there are some things you need to know about before taking the plunge. This article will discuss some of these essential factors, and hopefully ease your home loan process.
A Housing Loan for NRI has certain eligibility criteria that you should be aware of before applying. Some of the common factors influencing your eligibility are your age, educational qualification, tenure of employment, income and period of stay in the foreign country, with each lender having different upper and lower limits for the same. Some banks will provide an NRI a home loan even at the age of 18, whereas some lenders only provide loans to candidates above 25. As far as work experience is concerned, some lenders look for minimum of 2 years of work experience, where as some require only a year’s experience. When it comes to self-employed individuals the eligibility could range from 1 to 3 years of business operation. Some banks even have a minimum salary limit. So when weighing your option as far a lender is concerned, a good tip is to well-verse yourself with their eligibility criteria as well.
There are a lot documents required for a housing loan for NRI. Knowing all the documents is essential for a smooth loan application & sanction process. Copies of your passport, visa, PAN card, company appointment letters, latest salary slips for six months, your address proof documents of the current residential address, etc. are some of the common documents most lenders will ask you for. Each lender will have a different list of documents; ask for a printed list of the documents required so you don’t have to undergo any unnecessary trouble because you missed one document.
Once you’ve got all the formalities in place, you should consider the specifics of your loan such as the loan amount, the tenure, the interest rate and type of interest rate. The loan amount will generally be 80 to 85 percent of the property’s value. With a housing loan for NRI, you can choose a tenure ranging between 5 and 20 years. The interest rate is normally 0.25 to 0.75 percent more than normal home loan rates.
Once you have chosen all the parameters that suit your needs and the loan is approved, you will have to think about the payment method. You can pay your EMIs through inward remittance, NRE or NRO accounts and post-dated cheques. As an NRI, you have option to give the PoA (power of attorney) to a friend or relative. He or she can take care of the purchase process and can even make payments on your behalf. You can be specific about the rights your representative can exercise. So, remember to enquire about PoA with the lender you finalize on.
You can also save money with your home loan. If you have an income source in India, you can avail following tax benefits. Firstly, under section 24 of the Income Tax Act, you can claim deduction up to 2, 00,000 INR on the interest component of your EMI. You can also claim deductions on the principal repayment under section 80C of the Indian Income Tax Act up to a maximum amount of Rs. 1,50,000. These were two most common tax deductions, you can also avail deduction on stamp duty, registration charges and pre-construction interests.
These were some of the basics of a housing loan for NRI. Before you apply for one, make sure you study & research thoroughly. All the best!