Can an NRI Person Get a Home Loan to Purchase Property in India?
Non-Resident Indians (NRIs) are the Indian people who have settled in foreign countries. Though they might be earning well, this does not mean that they cannot require a Home Loan in India. NRIs too may be planning to settle back in their country after spending several years of their lives in an alien land. They might adjust to the surroundings, but at the end of the day, nothing feels better than a ‘home’. These people who lived like nomads do wish to spend the rest of their life, after they are free from family responsibilities, with the people they spent their childhood with. So what if NRIs need a Home Loan to settle again in their homeland? Are they eligible for one? The answer is yes. NRIs who dream of having a home in India, either for the ‘big awaited return’ or to build a property for their loved ones or their yearly visits, are eligible for and can Get a Home Loan in India. The terms and conditions may vary for them, in comparison to that for citizens of the nation. Foreign Exchange Management Act (FEMA) serves as the reference for decision making in such applications, and Reserve Bank of India is the regulating body deciding financial matters involving NRIs. FEMA thoroughly analyses property purchases made by citizens of India who reside outside the country, i.e., NRIs. Every purchase, be it for a house or a commercial store or building goes through a process defined by FEMA. Any limit for the number of properties an NRI can purchase is not set by the authority, but agricultural land or farmhouses remain distant from their access. They cannot accept them even as a gift.
Since RBI is the regulating body for the property purchases in India by NRIs, many people assume that for NRIs, there would be a need for some permission before buying a house in India. However, this is not the case. If you are purchasing a property by paying from the country you reside in, RBI will not interfere in it. Taxes applicable on the property will, in any case, get levied upon the property. As per Income Tax Act, if you own more than one property – one in India and another abroad – you will have to pay the income tax of one since the law assumes that you can occupy only one and you would use the other for generating income (house rent). The rule applies to the inherited property as well. RBI welcomes NRIs to take a Home Loan for constructing, purchasing or renovating their house. They can pay the EMI using regular banking channels like their bank account, or by issuing post-dated cheques from their NRE, NRO or FCNR Account; cheques from a relative’s account who resides locally also serve the purpose. If the property earns any rent, the same can also be used to pay the EMI. The payment can be made only in Indian currency.
The tax benefits also apply for NRI candidates. To perform formalities like registration, executing a sale agreement, taking the possession of the property; NRIs can also use the facility of giving the Power of Attorney (PoA) to a relative or someone they trust. The NRI should ensure that only specific rights are given to the person being assigned PoA. To get a Home Loan in India, an NRI can approach any bank or housing finance company which is registered under the national housing bank. The process will somewhat be the same. Documents will be verified, analysis of repayment will be done, and sources of income will also be discussed. A loan will be available in Indian currency, and the refund will also be made using the same money. The amount sanctioned as loan shall be credited either to the seller’s or the developer’s account. It can’t be credited into a foreign account.
To facilitate the things, and get a Home Loan in India one can opt for a bank which has an international branch, and executes all the functions without coming to India. The tenure of Home Loans for NRIs is generally short since the repayment capacity they hold is more than the residents of India. The maximum amount of the total fund needed for purchasing the house, given by the bank as a loan is 80%. Stamp duty, mortgage papers, and other charges are to be borne by the client. The bank would require a copy of passport, national identity proof, details of NRE or NRO accounts, salary details, work experience, bank account statement of last six months, work permit and job contract, to offer you a credit if you are an NRI. There are other documents involved too for the purchase of different types of properties. The bank is as much willing to give credit to an NRI as it is for a residential Indian. The process is defined to ensure no fraudulent transactions take place. An NRI is a citizen of India, even if the residence is outside India. He has an equal right to purchase property here and avail a housing loan for the same.
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