So you’ve left the land of your forefathers for greener pastures in some foreign land. You’ve worked hard, slogged, milled with the locals and have finally attained that coveted title of an NRI (Non Resident Indian). Worry not. This is not an article about brain-drain or attrition really. We’re talking about things an NRI needs to look into while applying for a home loan in India.
A burning question that most NRIs have in their mind is that if they have left India apparently for good and are unlikely to come back, will they be able to get a loan? Why would they need a house being an NRI you ask? Well, maybe for when they reach the retirement stage, maybe. Maybe they just to have some property back home, again, maybe. So how can an NRI go about procuring a home loan to buy a house in the country of their birth, even though they don’t reside in it anymore?
You will be surprised to know that banks and loaning authorities have simplified processes and made it easy for NRIs to acquire home loans akin to residents of India. There are a number of options and schemes that make it possible for NRIs to get a home loan in India now.
You are an Indian, as long as you are an Indian: We don’t wish to throw you off track or confuse you with that statement, but as long you hold a valid Indian passport and haven’t acquired citizenship in any other country, you are an Indian. As long as your nationality remains Indian, you can travel to, work in, or live in any part of the world and still be deemed an NRI, and thus avail the benefits that an Indian citizen can get. You also need to have been living out of India for at least 50% of the previous financial year. The RBI (Reserve Bank of India) and FEMA (Foreign Exchange Management Act) have defined this.
Not too young; not too old: You have to be at least 25 years of age. The legal age to vote in India is 18. To marry is 21. While a resident need not wait till 25, NRIs have to be a minimum of 25 years old to be eligible for a home loan in India. They also have to be less than 60 years of age, or should not have taken retirement (voluntary or otherwise) when the loan reaches maturity. After all, banks or loaning authorities need to be assured that you will pay the loan back. Retired or elderly individuals are likely to survive only on pensions and savings. That apart, due to their age, the possibilities of death are also considered.
In education we trust: For a salaried NRI, being a graduate in any stream, or at least a Diploma holder is mandatory. For someone who is self-employed, or runs their own business, an SSC or its equivalent is mandatory. It’s the bank or loaning authority’s way of saying, “If you’re educated, you are more reliable.” In case of an untoward incident, your education can help you get better jobs and a better pay – thus enabling you to pay back the loan. In simpler terms, an educated individual is considered to be more trustworthy than an uneducated one.
A score and that’s for sure: The maximum duration for an NRI home loan is 15 years (a resident of India can get a home loan for up to 30 years). Some banks and loaning authorities offer up to 20 years in terms of duration, but that is entirely up to the their discretion. They will consider factors such as your income, credit history, country you work in, and the company you work for in such cases.
A matter of keen interest: NRIs are liable to pay a higher rate of interest as opposed to residents. The reasoning is the obvious fact that NRIs are expected to earn more and have more money in the bank when converted to Indian currency (especially with the way the INR has been falling). Interest rates that NRIs could incur range from 0.25% to 0.5%. Service taxes and surcharges would be additionally charged.
The six digits that matter the most: You need to be making a minimum in terms of monthly and annual income. The figure differs depending on the country or region that you work in. Different banks also have different minimum requisites with regard to your income. While you need to check specifically with the bank that you are applying for a loan, it goes without saying that you need a six figure monthly salary to assure the banks.
There are other factors that also need to be kept in mind such as having all the right documentation that includes copies of your valid passport, visa, letter of employment, PAN card, salary certificate, bank statements, and an identity or labour card. You also an NRE (Non Resident Rupee) or an NRO (Non Resident Ordinary Rupee) account. An NRI can only take one loan at a time and must have an NRI guarantor or co-applicant.