Home loans for non-resident indians are similar to those offered to resident Indians, but the time limit is for a shorter period. Compared to resident Indians, the loan amount will not exceed 85 percent of the entire cost of the property. As the loans are offered to NRI’s, the eligibility requirement for loans is also very stringent. As an NRI, you will be entitled to a loan of a maximum 36 times of your gross monthly earnings.
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Required documents for NRIs to apply for a housing loan
Banks usually take more care when they are offering loans to NRI’s for constructing or buying a home as they do not stay in India. More documents are wanted compared to those required of resident Indians. As an NRI, you will be asked for a copy of your passport and visa, a copy of the contract letter of the employer, the salary statement and bank details for the last 6 months. The salary statement should also include the date of joining, your name, details of the pay and your designation.
For NRI’s working in the Middle East, the job identity card has to be countersigned at the office of the Indian consulate. There is a list of property documents that you have to provide when you apply for a loan. You have to provide the original title deeds dating back to 13 years, encumbrance certificate, sale or construction agreement, approved license or plan and a ULC clearance or conversion order.
All the receipts supporting investment of the margin money through the usual channels used by NRI’s like the NRE and the NRO account should be provided. You should also provide copy of the latest tax receipt. For a 5 year period, the rate of EMI is calculated at 7.5 percent, for 10 years and 15 years 8 percent, and for 20 years, 8.25 percent. The EMI calculated will be automatically debited from your local bank account on a monthly basis.
Third party guarantee for under construction property
Banks would obviously want more security for their loans when they are offering to the NRI’s as they do not stay in India. The first mortgage should be in the name of the NRI and if the property is being constructed when the loan is sought for, then an additional security in the form of third party guarantee is required. The third party guarantee can be provided by either a resident of India or a fellow NRI. Even though these are the normal requirements, some finer details are bank specific.
If you want to take a loan abroad, you have to take it from a loan provider who has offices in the city where you plan to acquire property. Some banks also require that loan providers have offices in your city of residence as well as the city where you want to buy the property. Even if every bank has a specific policy for offering home loans to NRI’s, they usually require them to have an account with the lending bank and show deposits that are kept apart from the property mortgage.
You can also provide your driving license, and the property documents including the latest sale deed with previous chain links, payment plan, allotment letter as well as receipts for all properties undergoing construction. Many banks insist NRI’s should have a close blood relative in India to take them on as co-applicants for the loan. Things have been made easy and many banks are willing to bend the rules if the NRI has a good track record and has proven financial capabilities in India or abroad which can be supported with valid documents.