No matter where you live, owning a house in India will be an enriching experience. Having a shelter will make you immune from the hassle of renting a property you would have to return to anytime.
But, purchasing a house anywhere in the world is an expensive affair, and India is no exception. Fortunately, NRI home loans are there to make the task of purchasing or constructing a house super easy.
However, the documentation and eligibility criteria of NRI home loans are a little different from standard home loans, which is why you must know the vital aspects before availing of such a loan.
5 Aspects of NRI Home Loans
Documents Required
Checking the NRI home loan documents list is important before applying. The first requirement is the application form. Download the application form online or visit the lender’s branch to collect it. Fill it out correctly.
Besides the application form, you need to submit documents like an appointment or employment letter, salary slips, identity proof, address proof, age proof, educational documents, and income tax returns.
If the appointment or employment letter is unavailable, submit a photocopy of your employment contract.
Eligibility
The eligibility for an NRI home loan is flexible.
- Your age should not be more than 70 years at the time of loan maturity,
- You should be working for at least one year in India before seeking a house loan. (This does not apply to people going abroad on deputation.)
- The minimum income requirement to apply for an NRI home loan depends on the loan repayment term. So, if you choose an extended tenure, your minimum income threshold will be high.
- You should be an Indian citizen or a Person of Indian Origin (PIO) holding an Indian passport with the status of NRI on deputation/ employment/ assignment.
Repayment Term
The repayment term, or tenure, of an NRI home loan, is usually shorter than the tenure of standard home loans. However, the actual term may depend on your credit profile and net monthly income.
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Tax Deductions
An NRI home loan makes you eligible to receive several tax benefits in India. For instance, you can claim up to INR 1.5 lakh on the principal component and INR 2 lakh on the interest component under Sections 80C and 24, respectively.
However, you must be a registered taxpayer in India to claim such tax benefits.
Interest Rate
The interest rate of an NRI home loan is usually higher than standard home loan rates. This is because NRIs pose higher credit risks than resident Indians. It is good to note that the effective rate depends on the borrower’s credit score. If your credit profile is solid, you can claim the lowest rate and vice versa.
Conclusion
You can use an NRI home loan to purchase a fully-constructed property or an under-construction property, extend your existing property or purchase a plot of land. Lenders usually provide up to 80% of the property’s value as a loan.
Ensure to check the NRI home loan documents list carefully and keep them ready before applying for the loan.
Also, Indian lenders allow the Power of Attorney to carry out the formalities for you. So, you don’t have to fly down to India every time the lender requires some documents or anything else.
