A home loan is sanctioned to the NRIs for any of the following housing finance schemes:
a) To purchase a house that is ready-built, under construction or from a second owner.
b) To fund the purchase of a plot of land allotted by a society / development authority.
c) For self-construction of a property on a plot of land.
d) For renovation or improvement of an existing property in India.
Your eligibility is calculated in the same way as it is calculated for resident Indians. More emphasis is laid on the following criteria in the appraisal of a NRI case:
a) Qualifications - the NRI applicant has to be a graduate
b) Current job profile & Past work experience
c) Probability of continuing abroad for the loan tenure
d) Probability of servicing the loan with an extended tenure in case you have to return to India.
The housing finance offered to NRIs normally does not exceed 5 years. However, some HFCs offer loans for a term of 7 years. The repayment for the loan is via EMIs. The EMIs begin only after the entire loan is disbursed. In case of a part disbursement, you pay simple interest at the rate applicable on the loan amount that is disbursed to you.
The loan towards the house has to be paid for the entire tenure of the loan through remittances from abroad through normal banking channels or from such accounts as may be permitted by RBI from time to time. As of today, the payments are done through NRO, NRE, NRNR and FCNR accounts. These accounts change on the basis of RBI permissions to each HFC.
No tax benefits are available for NRI customers unless you file returns and thereby become eligible to avail the tax benefits as mentioned under Home Loans.
NRIs are required to submit additional documents than is normally required for a resident Indian. a) A copy of the passport b) A copy of the works contract (also sometimes referred to as the contract card/labor card) c) The power of attorney (POA)
The POA is required because the borrower is not based in India and in such a scenario; the HFC would need a representative in lieu of the NRI to deal with as required. Although not mandatory, the POA is usually drawn on the NRI parents, wife or children.
