Housing Finance Companies (HFCs) offer NRI Home Loans. It is an essential mortgage product for Non-Resident Indians (NRIs) or Indian Overseas Citizens (OCIs) who wish to purchase a residential property. You can build houses on the Indian perimeter or repair and renovate existing properties with this loan. The applicants can take advantage of this feature through regular mortgage products from multiple lenders or as a standalone offering within the broader mortgage category.
Meet the Eligibility Criteria for NRI Housing Loans
Non-Resident Indians (NRIs), PIOs, and Indian Overseas Citizens (OCIs) are eligible to apply for NRI Home Loans in India if they meet the following:
- Age: Lenders typically offer their NRI mortgages to new loan applicants and existing borrowers, in the case of balance transfers, who are 18 years or older. However, NRI mortgage borrowers typically have to repay their loans by the age of 70 years. NRI housing loans can be applied for by working adults, self-employed persons, and business owners.
- Credit Score: Loan applicants with a credit score above 750 are more likely to get NRI Home Loans. Loans for low credit holders are not offered easily.
NRI Home Loan Details
Most lenders offer NRI mortgages at interest rates similar to regular mortgage products. However, interest rates for loan applicants using NRI’s Home Loan in India are based on factors such as monthly income, loan amount, credit history, occupation, and employer profile.
Home Loan Tenure
NBFCs usually offer their NRI mortgages for terms of up to 30 years. Lenders consider a loan applicant’s ability to repay before finalising the terms of an NRI mortgage. Lenders typically require a mortgage applicant to limit the contributions to EMI, including the proposed NRI mortgage, to 50-60% of the applicant’s net monthly income.
NRI Home Loans Balance Book Entry System
NRIs with existing mortgages can use the balance transfer option to transfer outstanding loans to other lenders at lower interest rates. However, borrowers should know that a new lender conducts a comprehensive credit risk assessment before confirming any balance transfer request.
Fees and Other Charges
Most lenders charge new and existing borrowers a processing fee to avail of NRI mortgages. NRI’s mortgage processing fees typically range from 0.25% to 2.00% of the total loan amount. The RBI has provided specific guidelines to prevent lenders from charging upfront fees on NRI variable rate mortgages. However, you are free to determine the amount of the upfront fee for NRI Fixed Rate Mortgages.
Many lenders also offer NRI Home Loans at low-interest rates to applicants with high credit scores. However, individual lenders also consider other factors such as the applicant’s income, country of residence, educational background, liabilities, assets, work experience (for salaried workers), and business continuity (for business owners) to determine the NRI’s suitability. For example, a loan applicant’s income eligibility may vary depending on the type of work and country of residence.
The Loan to Value ratio (LTV) is the mortgage loan amount relative to the appraised value of the property. NBFC allow NRIs with 80 to 85% of LTV depending on their monthly income. Another essential ratio when applying for a mortgage is the ratio of fixed monthly instalments to the monthly payment. They will increase the NRI’s ratio to 60%, depending on the applicant income.
NRI’s credit rating is done through their official email address. All details related to credit evaluation will be discussed and confirmed by email. The applicant’s employment abroad is made clear to the employer. To avoid credit check delays, they must notify Human Resources in advance. In addition, they may receive a call to confirm their employee code, the purpose of transfer, assignment, etc.
The Indian real estate market is lucrative for Non-Resident Indians (NRIs) to invest in. In recent years, there has been an increase in the number of expatriates investing their money in real estate in the country. Some of the government’s investment promotion initiatives have also sparked optimism among investors. However, without a well-defined regulatory authority, NRIs may face a lack of transparency and credibility. You may not always be familiar with the various mortgage rules and regulations, eligibility, applicability, etc. But it is straightforward nowadays to surf the internet, compare the different NRI Home Loan offers across vendors, and pick the right choice based on your requirements and financial capabilities.
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