Having a roof over one’s head is a cherished dream for every salaried individual. The dream of having one’s own home in one’s motherland remains intact for an overseas resident as well in most cases and in fact gets stronger by the day, as one yearns to get back home. As an NRI or an overseas borrower you can fulfil your dream of owning your home in your motherland.
In fact, the Government of India’s Foreign Exchange Management Act (FEMA) has made it easier for non- resident Indians to own property in India. There is no longer any restriction on the number of properties an NRI can own, with exception to agricultural land that can either be inherited or gifted.
However, as an NRI seeking to borrow in India, there are some rules and regulations that you must adhere to.
Eligibility: Whether you apply for HDFC home loans or a loan from any other bank, you need to be a graduate of at least 24 years of age. You will need to provide proof of your qualification.
Income: Both income earned in India and repatriate income will be considered for eligibility. Net income after paying taxes is considered for eligibility. Income proof will be required for assessment.
Interest rate and tenure– While interest rates for an NRI do not differ from a resident Indian, the tenure for the home loan for NRIs is usually 15-20 years in comparison to a resident who can get as much as 25-30 years.
Co-applicant and GPA– A NRI must have a co-applicant or a (general power of attorney) GPA to apply for a home loan in India.
Repayment in Indian currency– An overseas Indian cannot make repayments in foreign currency and make repayments in Indian currency through NRE or NRO accounts.
CIBIL score– Just like it is for resident Indians, a CIBIL score check is mandatory for overseas residents as well. If you have any existing credit lines in India, the same will be taken into consideration for credit assessment. Even if you have closed you loan accounts, your CIBIL score will remain valid and your credit history will speak for itself.
Now that you know the basic requirements for NRI borrowing here are some tips to make your borrowing process smoother:
Keep your key documents in order
First up, keep all your key documents ready for application of home loan. This will include the following.
Passport and Visa
Details of your permanent address
Work appointment letter/experience certificate
Work permit and employment contract
Salary certificates (3 months) and bank statements of your NRE/NRO account
Address proof of your overseas residence verified by your employer
Tax statements for your income overseas
As you can see the list is pretty long. It is thus advisable to go through the bank website and look through the document requirements, if any additional documentation is needed for the application process.
Selection of co-applicant and GPA
As mentioned earlier, a GPA is a must for overseas borrowing. A GPA can be your co-applicant as well. In case you do not want him or her to be a co-applicant, you must necessarily have a guarantor (a local resident) for the loan. You can choose from your trusted blood relatives for GPA and co-application to make life easier and close the transaction for you.
Presence of GPA during disbursement
Many overseas residents do not know that a GPA/co-applicant must be present in person at the time of the loan disbursement since you (the main applicant) cannot be there.
Inform your employer
While applying for HDFC home loans or any other home loan, the lender will double check all the documents with your employer. It is prudent for you to inform your employer, especially the human resources department about expecting such a call, to avoid unnecessary delay in the verification process.
If your co-applicant/GPA is also a joint owner of the property you are eligible for a reduction of 5 basis points on the interest rate applicable to your home loan.
Examine property thoroughly
An NRI can be more susceptible to property frauds as compared to resident Indians. When you are visiting India to make a property purchase, make sure you examine the property thoroughly. It is mandatory to look through the original title deed, legal documents and all other relevant documents before making a final decision. It is prudent to seek legal counsel to ensure that the legalities are covered amply and there are no chances of pitfalls later.
Check your CIBIL score
Most overseas resident do not pay attention to CIBIL score check once they are abroad. What they forget is that their ties with their homeland is not cut off despite being abroad for years at end. For instance, your parents may still be using your credit card of Indian origin, or you may have taken a personal loan while in India to help a sibling. Just like resident Indians, you need to keep making timely repayments on your existing credit lines, keep a check over your score for discrepancies and keep credit utilisation ratio under 30% to maintain a good score. If your credit score is not satisfactory at the time of loan application, it may well be rejected.
Now that you know all about loan eligibility and application, we hope you will be able to make a better-informed decision while applying for a home loan in India.
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