NRIs seeking home loan? Check this out

While home loans are available to resident individuals as well as non-resident Indians (NRIs), there are some differences in the terms and conditions applicable to the two. Here are a few points to get started:

Who is an NRI?

Banks follow the RBI definition, that is, an Indian citizen who holds a valid Indian passport and who stays abroad for employment or for carrying on business or vocation outside India or stays abroad under circumstances indicating an intention for an uncertain duration of stay.
Terms and conditions

Eligibility:

The NRI has to be a graduate. The same does not apply to resident Indians. He should earn a minimum monthly income of $2,000. This criterion may differ across housing finance companies (HFCs).

Size of loan:

The loan amount should not exceed 85 per cent of the cost of property. In case of Indian residents, banks can lend up to 90 per cent of the cost of property. The size of the loan depends upon the borrower’s repayment capacity. However, there is a maximum limit. For instance, HDFC offers loans of up to Rs 1 crore, while SBI offers a maximum loan of up to 24 times the borrower’s net monthly income.

Repayment:

The NRI has to pay the EMI cheques through his non-resident-external (NRE)/ non-resident-ordinary (NRO) account. He cannot make payments from his savings account (if any) in India.

Tenure:

The rate of interest is almost similar to loans availed by residents. The difference lies in the tenure of loans. Residents can avail home loan for 20 years or even more. However, leading banks or HFCs provide home loan only for a maximum of 15 years.

Paperwork:

NRIs are required to submit additional documents. For example, certain documents like a copy of the passport and a copy of the works contract (also sometimes referred to as the contract card/labour card) are required only for NRI loans. He also has to submit property-related documents including original title deed tracing the title of the property for a minimum period of the last 13 years; encumbrance certificate for the last 13 years; agreement of sale/construction, if any; approved plan/license, ULC clearance/conversion order; receipts for having invested the margin money through normal banking channels from the NRE and/or NRO account in India.
Bankable business

ICICI Bank provides 100 per cent financing if the property is bought from any of the builders it has tied up with. However, this offer is limited to specific projects.

HDFC too has tied up with service associates in Kuwait, Oman, Saudi Arabia and Qatar, apart from having a presence in Dubai. These offices offer advisory services in real estate and real estate financing to Gulf-based NRIs wanting to acquire homes in India. These offices coordinate the entire loan process in India. Even Bank of Baroda provides margin money in the country where the NRI resides if the borrower is not physically present in India to carry out the loan formalities.