Non-Resident Indians (NRIs) are recognised under the Foreign Exchange Regulatory Act.
The RBI guidelines followed by banks and housing finance companies states ďthat an Indian Citizen holding a valid document like Indian Passport, is employed abroad or is carrying on business or vocation outside India or is living abroad for an uncertain duration of stay is an NRI.
Home loans for NRIs are available for construction of new house/ flats, purchase of old House, addition/alteration to an existing house and repairs/renovation etc. NRIs can mortgage an existing residential property to avail loans. For that NRIs will have to fulfill certain conditions according to provision of the Income Tax Act. Either they should have stayed in India for a period of 182 days or more within an assessment year or they should have stayed for the total of one year or more in the country.
The FDI policy allows NRIs to invest upto 100%, besides banks offer attractive NRI housing schemes with suitable repayment options. It is also advised that due to the vast distances separating them, NRIís should deal with proactive and responsive Housing Finance Companies.
The eligibility criteria for NRIs are different from RIs and are based upon the following parameters.
NRIs can avail of home loans ranging from Rs 5 lakhs upto Rs 1 crore based upon his ability of repay and the property cost which can be determined by the Home loan providerís priority.NRIs will be eligible for a maximum of 85% property cost or cost of construction as applicable and 75% land cost, if land is being purchased.
NRI can also apply for loan alongwith a co-applicant with a separate income source. NRIs have to pay an extra 0.25% - 0.50% interest on home loans compared to resident Indians. There is also a negative criterion based upon location in HFC guidelines and NRIs hailing from those locations find it difficult to avail loans.
The Reserve Bank of India (RBI) has clarified that Non-Resident Indians (NRI), purchasing Immovable property in India should pay for the acquisition by funds received in India through normal banking channels by way of inward remittances from outside the country.
The NRIs and Resident Indians can also acquire immovable property in India other than agricultural property, plantation or a farmhouse. It has issued certain directives for sanctioning home loans to Non-resident Indians.
Non-resident Indians are required to submit additional documents as compared to resident Indians, like the copy of the passport and a copy of the works contract etc, besides follow certain eligibility criteria in order to get home loans in India.
The Power of Attorney (POA) is also a vital document required while processing an NRI home Loan because in the absence of the NRIís physical presence in India, a local representative is needed to deal on behalf of the NRI. The POA representative is usually the NRIís parents, wife or children, although it is not statutory.