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An NRI home loan will follow the same structure as a normal home loan with the loans being repaid in Equated Monthly Instalments (EMI). The difference arises in the interest rate and tenure, where the interest rate for NRIs is slightly higher and the loan tenure is lower than compared to home loans provided to Indian residents.
The NRI home loans have lower tenure as the borrowers earn a handsome income which indicates a higher repaying capability. Moreover, most of the NRI borrowers wish to close the loan at the earliest.
Hundreds of Indians immigrate to different countries each year for work, higher studies or business opportunities. This migration has led to thousands of families located in North America, Europe and Middle East.
Coined as NRI (Non-Resident Indians) are people who have an Indian passport and are living abroad for a long time (more than a year) for work, studies or other legal purpose. According to FEMA an NRI is “who resides outside India for employment, carrying on business or vocation in circumstances as would indicate an intention to stay outside India for an indefinite period”. It also mentions that any Indian who hasn’t lived in India for more than 182 days during that financial year he/she is considered an NRI.
It is to these people that banks/NBFCs provide home loans at competitive and exclusive interest rates.
The reason for this lower tenure is because NRIs earn in stronger currency like in the US where $1 equals Rs.67, which means the repayment capacity of NRIs. Also, NRIs themselves prefer to complete their repayment as soon as possible and thus the lower tenure.
The NRI home loan is offered to people who have been living outside India whose loan tenure, loan amount sanctioned, and interest rate will depend on the customer’s profile, age of customer at maturity of loan, age of property at loan maturity, depending upon the specific repayment scheme as may be opted and any other terms which may be applicable based on prevalent norms of lender bank/NBFC.
What follows is general eligibility criteria. Do check with the respective bank for the exact eligibility criteria
Salaried – Should have lived abroad for at least 1 year
Self-employed – Should have lived abroad for at least 3 years
The following are the documents required to apply for the NRI Home Loans
Personal details documents
If you have opted for an NRI Personal Guarantor on your loan, arrange to send the following documents
As per RBI rules Repayment must be done in rupees through an account in the India or utilizing NRE or NRO accounts. If the property is rented out the rent receipt can be used against the Equated Monthly Instalments (EMI)
As with resident Indians NRIs can also avail tax benefits on home loans under section 24 and 80c. NRIs can get tax exemption on the interest paid for a maximum of Rs. 2,00,000 and Rs.1,50,000 on the principle paid under section 80c. If it is a joint loan taken with another NRI or resident Indian/s then each member can avail for the tax benefits separately.
Restrictions in property owned
The Government of India has stipulated that an NRI can only own 2 houses in India. That is, they can own only 2 properties for residential purposes. Even if the properties are rented out they can only own two. They can own any number of commercial properties while they cannot own land for agriculture.
1. What is the maximum loan amount that I can get through NRI Home Loan?
A person can get maximum 90% funding if the loan amount is Rs.30 lakhs, 80% up to Rs.75 lakhs and 75% for loan amounts above Rs.75 lakhs.
2. How can I repay the NRI home loan EMI each month?
As per RBI rules Repayment must be done in rupees through an account in the India or utilizing NRE or NRO accounts. If the property is rented out the rent receipt can be used against the Equated Monthly Instalments (EMI).
3. Are there any penal charges for Bank NRI Home Loans?
Yes, if you miss payments there is a penal charge that is levied in accordance with bank policy.
4. What is the maximum loan tenure that I can get?
The maximum Loan tenure that you can get from NRI home loans is 30 years.
To know how much you will have to pay as EMI you can visit the official website of the bank. Go to ‘Tools and Calculators’ page where you will find the option for ‘Home Loan EMI Calculator’. After entering the page, you will find three fields where you need to enter the following details: 1) Loan Amount, 2) Interest Rate and 3) Tenure in years.
After entering the necessary details, the calculator automatically calculates the loan EMI amount to be paid and delivers the result on the same page. It takes less than a minute to check the EMI amount against the home loan to be taken.
You can also view a similar home loan EMI calculator on CreditMantri website and apply for the loan directly. You will find the results of total amount payable with interest and interest payable separately.
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