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NRI Loans

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Are you a Non Resident Indian (NRI)? Your dream is to purchase a flat in a beautiful residential apartment near Hi-tech City, Hyderabad? You probably need a Home Loan. The following things should be considered before you go on searching for right home loan offer.

Who is Non Resident Indian?

First of all you must make sure of yourself whether NRI tag applies to you or not. Foreign Exchange Management Act-FEMA recognizes you as the NRI the moment you steps on the foreign soil with an intention stay there. You are entitled to be a NRI if you are an Indian Citizen, holding valid Indian passport. You are staying in foreign soil for Business, Employment or for vocational purpose. This definition applies to the Indian Citizens staying abroad for an uncertain duration.

Definition of NRI for Income Tax purpose depends on the duration of the persons stay outside India. But in FEMA it depends on the intention stay outside India for an indefinite period. For Home Loan and purchase of residential property in India purpose, these definitions will not have many implications except during the first year. IT Act takes in to account the duration of stay abroad during that financial year.

Persons of Indian Origin (PIO), who are residing outside India, are also considered to be an NRI. To get recognized as a PIO either you or your parents/grand parents must been citizens of Independent India.

Citizens of Pakistan, China, Afghanistan, Bangladesh, Nepal, Bhutan and Iran are not considered to be PIOs.

What can a NRI buy?

Non Resident Indians can purchase any immovable property in India except agricultural land, farm house and plantation. NRIs can also avail Home Loan to purchase property.

Though it it's called NRI Home loan, it just like the loan offered to the resident Indian in many respects. Basic difference can be observed in the following seven issues, where banks fear to lend

Each bank will maintain a data base of approved places. NRIs working in places which are in negative profile may not be able to get Home Loans.

In order to get loan, NRI must be a graduate. Educational Qualification may not be a constraint for resident Indians.
Most of the Banks stipulate that the NRI should have a monthly income of $ 2,000 per month. This yard stick may vary from bank to bank.
NRIs need to submit certain additional documents like copy of the passport, a copy of the works contract.
A Resident can pay through post dated cheques or through savings bank account. But NRIs should repay the loan through Non Resident External (NRE) or Non Resident Ordinary (NRO) account cheques only.
Resident Indians can avail loan for tenure up to a maximum of 240 months. But, NRIs loan term is 180 months maximum. In fact some banks restrict it for 120 months only. Maximum term for NRI home loans varies from bank to bank.
NRIs not based in India and they may not be in position to sign on all papers and enter in to agreements for the purchase of apartments in Hyderabad. So, they need to submit a power of attorney to get a housing loan.
NRIs may have to pay additional interest rate than the resident Indians. Normally NRIs required to pay 0.25 percent to 0.50 percent more.

Present job profile, Educational and professional qualifications-experience, probability of continuing in abroad till the loan repaid also to be considered.

HOW MUCH LOAN?

Loan amount eligibility criteria are same as applicable to resident Indians.
Normally, an NRI can get a home loan up 36 times of his gross annual income. You can check yourself with our EMI Calculator tools.

Ordinary Resident Indian gets up to 85 percent of the property value. This is called the Loan to Value (LTV) Ratio. Many banks will apply the same thumb rule for the NRIs.

WHAT ARE THE DOCUMENTS?

Income documents

Visa stamped on passport
Copy of the employment contract
If the contract is in any language other than English, the same has to be translated into English and counter signed by the employer/Indian Embassy.
Latest salary slips (Certified) for the past 6 months.
Identity card issued by the present employer.
Continuous discharge certificate (if applicable )
Latest work permit.
If you are working in merchant navy, contact slip with income details.
Copy of the local income tax returns.
Non Resident External (NRE), FCNR, NRO and International account passbook sheets
Overseas Bank account statement for the past six months.
Bio data details about educational qualifications, age, job experience and profession/business with proof.
Power of attorney in favor of local representative in India.

Purchase of a flat from a reputed builder in Hyderabad

Title deeds of the builder/land owner for a period of last 13 Years
If the land is developed by the builder, development agreement between the builder and land owner.
Power of Attorney executed in favor of the builder, if applicable.
An Encumbrance Certificate (EC issued by the concerned sub registrar) For the past 13 years.
Khasra Pahani (a document indicating ownership of property as entered by the revenue authorities)
A sanctioned plan.
An agreement for sale and a construction agreement with the borrower.

In case if you are in India, the Power of Attorney can be locally notarized.

Normally Wife, Husband, Father, Mother, Brother, Sister be given the power of attorney.

The power of attorney holder does not have the power of dealing with the property. He or she gets the powers that you clearly mentioned in the power of attorney.

Personal documents

Passport size photograph.
Copy of your passport, PAN card, Driving License, SSC – School leaving certificate, Birth Certificate, LIC Policy.
Bankers sign verification.