Having a quarter for a dwelling is a dream for everyone and thanks to the versatile range of home loans available in the market that help us to convert our ideas into reality. One such segment is an NRI home loan. But is it possible to avail of a home loan without taking too many hassles? Yes, now even NRIs can enjoy the facilities of procuring home loans in India, by fulfilling specific criteria and procedures as laid down by the financial institutions.
Essential provisions for NRI home loans:
Documentation: Initially, the NRIs will have to start with documentation to procure a home loan in the Indian subcontinent. This, basically includes KYC details like full passport and work visa copy, employer ID card, and overseas residential proof. Next, the lending institution will check the income documents like proof of valid work permit, employer contract, salary slip of the last three months, last ITR, last six months salary account statements, etc.
Finally, it comes to the documents related to your property which is a little complicated procedure where you need to submit your property papers along with a general power of attorney in favor of an Indian resident who will conduct the proceedings with the bank in your absence. After filling a definite format regarding the power of attorney given by the bank, you have to go to the Indian embassy to put a seal of approval on it.
The interest rate on loan amount: Usually, the interest rates are higher in case of an NRI home loan as the risk involved is more. But there is a general margin of 0.25%-0.50% being charged. Moreover, if the property is well-maintained chances of loan approval become higher. Now, home loans offered for NRIs also come with fixed, floating, and combined interest rates. The fixed-rate loan has an interest rate that is fixed at the time of loan approval. All throughout the loan tenure, this rate remains constant.
On the other hand, floating-rate are altered according to the benchmark rate of the lender. If the benchmark rate gets changed, then it will also be reflected upon the interest rate. And the combined-rate has a part of a loan with a fixed interest rate and another part with a floating interest rate. If a borrower can convince a lender regarding his job profile and good salary package, then there are fair chances of influencing the interest rate. Again, if the borrower has a good relationship with the lending institution, then also he can avail of a loan at a lower interest rate.
Tenure and repayment of home loan: The tenure of home loan for an Indian citizen is generally stretched up to a long period of around 30 years. But this is certainly not the case when it comes to a home loan tenure of an NRI which can be around a maximum period of 15 years. If a bank or NBFC decides to go beyond the time, then it solely depends upon the discretion of the concerning financial institution.
Another thing that should be kept in the notice is the way a repayment should be made. The repayment of these home loans have to be fulfilled through the Non-Resident Ordinary (NRO), or Non-Resident External (NRE) accounts settlements coming from abroad. Remember, no other funds can be utilized for remittance of the loan amount. This repayment should not be made in any foreign currency, and only Indian rupees is acceptable for this purpose. Besides, if there is any change in NRI status, the loan conditions like interest rate and tenure will get revised in proportion to the net income of the individual.
The total cost of a home loan: You may assess all the feasibility in procuring a home loan, but the total cost of the home loan is an equally important aspect that should be there in your consideration checklist. The additional costs might include administrative charges, prepayment penalties, processing fees, late payment charges, etc. Prepayment in NRI home loans are typically nil, but the maximum a lender can charge is about 2%. Certain lending institutions have the provision of nominal fees which allows adjusting the interest rate in favor of the borrower. When comparing a home loan, check the hidden charges and fees on the website as it is mandatory for the lending institutions to disclose these details.
EMI calculations on home loans: This is something very common and applicable to both the Indian and NRI citizens when applying for a home loan. This means repaying both the principal amount accompanied by the interest rate charged on the outstanding loan amount left in a monthly installment procedure. So by providing details relating to your loan amount, interest rate, and loan period, you can easily check the loan EMIs (Equated Monthly Instalments) through online devices like home loan EMI calculator.
As technology is moving ahead now, it is possible to get all the information regarding the NRI home loan and its application process by a simple click on the computer. There are many third-party financial websites where it is quite easy to check and compare the interest rate simultaneously. By following a few procedures and meeting certain criteria home loan for NRIs will help them to construct their dream home in their motherland.