NRI Home Loan – Meaning and Types Of Home Loans You Can Get

Posted by Shashank Bhaskar on December 11th, 2019

Buying a house is one the most cherished dreams of every individual. We all hope to become property owners someday. But with real estate rates touching the skies, this dream becomes more and more impossible to achieve through savings. What you need is a home loan. You can get a home loan irrespective of whether you are a resident Indian or a Non Resident India. However, unlike the wide variety of home loans, available to resident Indians, NRI can avail only three basic kinds of home loans. Let’s understand what NRI home loans are and the 3 types of loans NRIs can get.

What is NRI home loan?

An NRI home loan is simply a loan provided to NRIs for purchasing property in India. This loan is provided by various banks, while a few Housing Finance Companies also provide this facility to NRIs. These loans are provided to NRIs, OCIs and POI, typically against their savings parked in their NRE, NRO or FCNR accounts.

The loan should be repaid in Equated Monthly Instalments over tenures of 20 to 30 years. The interest rate and charges applicable on the loan for NRIs remains the same as those quoted to resident Indian borrowers. You must check the NRI home loan eligibility criteria set by your lender before applying for the loan.

3 types of home loans

As an NRI, you can apply for any of the 3 below mentioned housing loans. They are:

1. Regular home purchase loans

This is the most common type of home loan available to NRIs. You can get a loan to purchase a new, ready-to-move-in property, an existing property purchased from another home owner or an under-construction property. These could be apartments, flats, villas, bungalows, independent houses or row houses. Most lenders are not much concerned about the age of the property as long as it is well-maintained. Also, the residual age of the property you wish to purchase should be approximately 12 years.

2. Home construction loans

If you have a plot of land and wish to construct a home on it, you can apply for an NRI home loan for construction purposes. Construction loans are ideal for people who do not want to purchase readymade properties and would rather design their homes on their own. You can customise your house the way you deem fit, as long as the construction undertaken does not violate any government laws; for instance the number of floors you build on the property. In case of construction loans, the land on which the house is constructed is taken by the bank as collateral. The bank seizes the land on which construction is done if the borrower is unable to repay the loan.

3. Home renovation loans

Another type of home loan available to NRIs is a home renovation loan. These loans are available for big and small renovation purposes; from fixing leaky ceiling, repairing wires and painting the house to making huge alterations such as resizing the rooms, creating duplexes out of two flats or changing the entire floor plan. In case you need to undertake major renovation work, this type of NRI housing loan can be availed by pledging your property as collateral to the lender.

Final word: Before you approach the bank for any of the above mentioned housing loans, ensure that you check the NRI house loan eligibility criteria. Make sure you have the required credit scores and sums to make a down payment. Also remember to use both, home loan eligibility and EMI calculators to understand the loan eligibility amount and EMIs payable against the loan.