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Important things to consider before opting for an NRI Home Loan

Summary: Like resident Indians, NRIs can also apply for Home Loans in India if they wish to buy a property. However, there are some important points that they should know before applying. Let’s understand these important aspects of NRI Home Loans in the article below.

28 Jun 2023 by Team FinFIRST

NRIs opting for a home loan in India

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Here are some interesting facts about NRI and Home Loans, as per the CII-Anarock Consumer Sentiment Survey:

53% of the surveyed NRIs intended to buy a home in India for self-residence
47% of the respondents intended the property as an investment

Whatever the intended use, Indian real estate is a hot pick among NRIs. Many of them opt for an NRI Home Loan to fund the purchase. Are you thinking of availing of one too?

Several banks and Non-Banking Financial Companies (NBFCs) offer NRI Home Loans. However, before applying for a loan, there are several factors that you should consider.

READ MORE

All you need to know about NRI Investments in India in 2023

6 things NRIs should know before investing in India

5 Factors to consider before applying for NRI Home Loans

1. Eligibility criteria

Every NRI Home Loan comes with its set of criteria. While it may vary across lenders, some of the most common ones include the following -

Age bracket	Minimum : 23 years Maximum : 60 years
Occupation	Salaried
Work experience	A minimum work experience of at least 3 years is needed by most lenders
Minimum income	Usually starts at Rs 2.5 lakhs
Type of property	All types of property except agricultural property, farmhouse, or plantation. To buy any of these properties, a special RBI (Reserve Bank of India) approval is needed

2. Local co-applicant

Almost all lenders require NRIs to appoint a local co-applicant for the loan who would jointly take the Home Loan with the NRI. The co-applicant is also responsible for repaying the loan.

The lender might also ask NRIs to give the co-applicant the Power of Attorney (PoA). The PoA allows the co-applicant to deal with the lender, sign the necessary documents, and get the loan processed easily.

Also read - 5 Mistakes to avoid while availing a Home Loan

3. Exchange rate fluctuations

The NRI Home Loan is issued in Indian Rupee (INR). It is also repayable in INR. As an NRI, you will have to open a Non-Resident External (NRE) or Non-Resident Ordinary (NRO) account with an Indian bank. Once open, you can transfer your foreign income into the NRE account or the NRO account and use it to repay the loan. However, be aware of the exchange rate fluctuations since they would affect the repayment.

4. Tax implications

NRIs can claim deduction under Section 80C and Section 24(b) on their NRI Home Loan repayment. Section 80C will allow you to claim a deduction on the principal paid (up to Rs 1.5 lakhs), while Section 24(b) will exempt the interest expense (up to Rs 2 lakhs).

Note: Under the new tax regime the above benefits are not applicable

5. Additional documentation requirements

NRIs have to submit additional documents for loan processing, such as -

Income proof
Employment contract
Visa or passport
Work permit

Also read - Various types of Home Loans you can apply for

Conclusion

If you are an NRI and are looking for an NRI Home Loan, know these aspects before applying. Compare the interest rates offered across lenders and choose one with a competitive rate.

Metra Trust offers NRI Home Loans with competitive interest rates. You can get loans up to Rs 5 crores with a repayment tenure of up to 360 months. Simplify your home buying process with Metra Trust Home Loan and invest in your dream property.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject Metra Trust or its affiliates to any licensing or registration requirements. Metra Trust shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.

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