HOME LOAN FOR NON-RESIDENT INDIANS
Buying a home is always a biggest financial decision in every ones life. After lots of thinking and consulting most people don't realize to reflect upon the financial resources they have got to buy the property. This thing happens usually with those who are buying home for the first time.
There is no need to hurry as you are investing your hard earned money. Everyone has got different set of mind for owning their dream home.
Broadly categorized, Non-Resident Indians qualifying for NRI housing loans are:
* Indian citizens who stay abroad for employment or for carrying on business or vocation outside India or for any other purpose in circumstances indicating an indefinite period of stay abroad;
* Government servants who are posted abroad on duty with the Indian missions and similar other agencies set up abroad by the Government of India where the officials draw their salaries out of Government resources;
* Government servants deputed abroad on assignments with foreign Governments or regional/international agencies like the World Bank, International Monetary Fund (IMF), World Health Organization (WHO), Economic and Social Commission for Asia and the Pacific (ESCAP);
* Officials of the State Government and Public Sector Undertakings deputed abroad on temporary assignments or posted to their branches or offices abroad.
Documents required for Resident Indians as well as for NRIs for getting Home Loans are different in some respect. Home loans for NRIs are available for construction of new house / flats, purchase of old house / flat addition / alteration to an existing house and repairs / renovation etc. NRIs can avail of loans by mortgaging an existing residential property. However, for availing home loans, NRIs have to fulfill certain conditions according to provisions of the Income Tax Act. They should have stayed in India for a period of 182 days or more within an assessment year or they should have stayed in India for at least a total of one year or more.
The FDI Policy that permits FDI up to 100% from foreign/NRI investor under the automatic route has boosted NRI confidence. Banks have attractive NRI housing schemes to accommodate the housing needs of NRIs. From the stables of HFCs, NRI housing finance plans with suitable repayment options are available.
Last but not the least, NRIs should take due care while selecting their home loan provider companies or HFCs. Considering the geographical distances involved, it is significant that loan seekers associate with a proactive and responsive HFC.
ELIGIBILITY:
The eligibility criteria of NRIs differ from Resident Indians based on a few parameters. The parameters include:
Age: The loan applicant has to be 21 years of age.
Qualification: The NRI loan seeker has to be a graduate.
Income: The loan applicant has to have a minimum monthly income of $ 2,000 (although, this criterion may differ across HFCs).The eligibility is also determined by the stability and continuity of your employment or business.
Payment options: The NRI also has to route his EMI (Equated Monthly Installments) cheques through his NRE/NRO account. He cannot make payments from another source say, his savings account in India.
Number of dependants: The eligibility of the applicant is also determined by the number of dependents, assets and liabilities.
An NRI applicant is eligible to get a home loan ranging from a minimum of Rs 5 lakhs to a maximum of Rs 1 crore, based on the repayment capacity and the cost of the property, which although is variable by the priorities of the home loan provider. Also Home Loan Tenure for NRIs is different from Resident Indians.An applicant will be eligible for a maximum of 85% of the cost of the property or the cost of construction as applicable and 75% of the cost of land in case of purchase of land, based on the repayment capacity of the borrower.
However, a NRI can enhance his loan eligibility by applying for home loans with a co-applicant who has a separate source of income. Also, the rate of interest for home loans to NRIs is higher than those offered to Resident Indians. The difference is to the extent of 0.25%-0.50%. Some HFCs also have an internally earmarked 'negative criterion' for NRI home loans. As such, the NRIs who hail from locations that are marked as being 'negative' in the books of HFCs, find it difficult to get a home loan.
RBI DIRECTIVES FOR HOME LOANS
The Reserve Bank of India (RBI) has clarified that Non-Resident Indians (NRIs) and Persons of Indian Origin (PIO), purchasing immovable property in India should pay for the acquisition by funds received in India through normal banking channels by way of inward remittance 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 directive for sanctioning home loans to Non-Resident Indians. The guidelines provided are:
The home loan amount should not exceed 85% of the cost of the dwelling unit, as the remaining amount that is 15% needs to be provided an own contribution towards the cost of unit financed.
The cost of dwelling unit which is own contribution financed less the loan amount, can be met from direct remittances from abroad through normal banking channels, the Non-Resident (External) [NR(E)] Account and /or Non-Resident (Ordinary) [NR (O)] account in India.
However, repayment of the loan, comprising of the principal and interest including all the charges are to be remitted to the HFC from abroad through normal banking channels, the Non-Resident (External) [NR(E)] Account and /or Non-Resident (Ordinary) [NR (O)] account in India.
The repayment option for NRIs as they can pay through the funds held in any non-resident account maintained in accordance with the provisions of the Foreign Exchange Management Act, 1999, and the regulations made by the RBI from time to time. As most of the home loan provider companies consider the economical stability of the applicant, home loans for NRIs are quite feasible, because they are well in economic resource.
REPAYMENT OPTION
The repayment option for Non-Resident Indians (NRIs) is done in EMIs, and includes interest and principal amount calculated on monthly rests. The borrower can pay EMIs by issuing post-dated cheques from your Non Resident External (NRE)/Non-Resident Ordinary (NRO) or Non Resident (Special) Rupee Account (NRSR) in India; or any other account approved by the Reserve Bank of India (RBI).
In the case of part-disbursement of the loan, the monthly interest is payable only on the disbursed amount. EMI is payable every month, by the end of the month from the date of each disbursement up to the date of commencement of EMI. Pre-EMI is calculated at the same rate at which EMI is calculated.
Step Up Repayment Facility
By the step-up repayment option, a borrower can apply for a higher range loan based on the prospects of growth in income for years to come. In this repayment option the loanee has to pay less EMI in the initial years which increase as the income grows with the coming years.
Flexible Loan installments Plan
In this mode of repayment, the borrower has flexible loan installment facility where a borrower nearing retirement age can opt for paying higher EMI in the initial years and gradually move to paying lower installments after reaching retirement age.
Tranche Based EMI
Tranche Based EMI is a special facility offered to the customers so as to save their interest, in cases when customers purchasing an under construction property need to pay interest (on the loan amount drawn based on level of construction) till the property is ready. In such cases, customers can fix the installments they wish to pay till the property is ready. The minimum amount payable is the interest on the loan amount drawn. Anything over and above the interest paid by the customer goes towards principal repayment. The customer benefits by starting EMI and hence repays the loan faster.
Accelerated Repayment Scheme
Accelerated Repayment Scheme for NRIs offers a great opportunity to repay the loan faster by increasing the EMI. Whenever you get an increment, increase in your disposable income or have lump sum funds for loan prepayment, the loanee can benefit by
* Increase in EMI, which means faster loan repayment
* Saving of interest because of faster loan repayment You can invest lump sum funds rather than use it for loan prepayment.
A NRI loanee can opt for repayment ahead of schedule, by remittances in abroad through normal banking channels, your NRO / NRSR in India. However, by regulations in many states in India, the Agreement of Sale between the builder and purchaser is required to be registered by law. It is therefore advisable to record the agreement for registration within four months of the date of the Agreement at the office of the Sub Registrar appointed by the State Government, under the Indian Registration Act, 1908.
HOME LOAN TENURE
The home loan tenure for Non-resident Indians differs from the Resident Indians on a few points, which may of course vary from one HFC to another. For most HFC the home loan tenure exceeds maximum from 25 to 30 years. However, for NRIs the maximum tenure is from 7 years up to 15 years.The number of years fixed by RBI. However, you cannot opt for a term that extends beyond your attaining retirement age or 60 years of age (whichever is earlier).
TAX BENEFITS
NRIs cannot claim tax benefits on home loans in India as they have to pay tax in the nation where they work and earn. Moreover, you need to file tax returns to become eligible for home loans. However, if they pay tax in India for income earned in India, they can claim tax rebate for the home loan.
DOCUMENTATION
The documentation required to be submitted by the NRIs are different from the Resident Indians as they are required to submit additional documents, like copy of the passport and a copy of the works contract, etc. And of course NRIs have to follow certain eligibility criteria in order to het Home Loans in India.
Another vital document required while processing an NRI home loan is the power of attorney (POA). The POA is important because, since the borrower is not based in India; the HFC would need a 'representative' 'in lieu of' the NRI to deal with and if needed. Although not obligatory, the POA is usually drawn on the NRI's parents/wife/children.
Following documents needed for obtaining NRI home loans:
Passport and Visa
A copy of the appointment letter and contract from the company employing the applicant.
The labor card/identity card (translated in English and countersigned by the consulate) if the person is employed in the Middle East Salary certificate (in English) specifying name, date of joining, designation and salary details.
Bank Statements for the last six months
List of Classified documents for Salaried and Self Employed NRI Applicants
Salaried NRI Applicants • Copy of valid passport showing VISA stamps
• Copy of valid visa / work permit / equivalent document supporting the NRI status of the proposed account holder
• Overseas Bank A/C for the last 3 months showing salary credits
• Latest contract copy evidencing Salary / Salary Certificate / Wage Slips
Salaried NRI Applicants
• Passport copy with valid visa stamp • Brief profile of the applicant and business/ • Trade license or equivalent document • 6 months overseas bank account statement and NRE/ NRO account • Computation of income, P&L account and B/Sheet for last 3 years certified by the C.A. / CPA or any other relevant
Property Documents:
• Original title deeds tracing the title of the property for a minimum period of the last 13 years.
• Encumbrance Certificate for the last 13 years.
• Agreement of sale /construction, if any
• Receipts for payments made for purchase of the dwelling unit.
• Approved plan / license.
• ULC clearance /conversion order etc.
• Receipts for having invested the margin money through normal banking channels from the Non-Resident (External) account in India and / or the Non-Resident (Ordinary) account in India.
• Latest tax paid receipt.
• Allotment letter from the co-operative society / association of apartment owners.
• Agreement for sale / sale deed /detailed cost estimate from Architect / Engineer for property to be purchased / constructed /extended / improved.
• Copy of approved drawings of proposed construction/purchase/extension.
Additional documents to be submitted by Person of Indian Origin
• Photocopy of PIO card.
• If the PIO card is not available, photocopies of any of the following documents:
• The current passport, with birthplace as 'INDIA'
• The Indian passport, if held by the individual earlier.
• Parents/grandparents Indian passport/birth certificate/marriage certificate substantiating the individuals claim as a person of Indian origin.
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Q13). Can authorized dealer grant housing loan to non-residents of Indian nationality where he is a principal borrower with his resident close relative as a co-obligator/guarantor or where the land is owned jointly by such NRI borrower with his resident close relatives?
Ans: Yes. However, in such cases the payment of margin money and repayment of the loan installment should be made by the NRI.
Q14). Can NRIs obtain loans for acquisition of house/flat for residential purpose from authorized dealers/financial institutions providing housing finance?
Ans: Reserve Bank has granted general permission to certain financial institutions providing housing finance e.g. HDFC, LIC Housing Finance Ltd., etc., and authorized dealers to grant housing loans to non-resident Indian nationals for acquisition of a house/flat for self-occupation subject to certain conditions. The purpose of the loan, margin money and the quantum of loan will be at par with those applicable to housing loans to residents. Repayment of loan should be made within a period not exceeding 15 years out of inward remittance or out of funds held in the investor's NRE/FCNR/NRO accounts.
Q15). Can Indian companies grant loans to their NRI staff?
Ans: Reserve Bank permits Indian Firms/Companies to grant housing loans to their employees deputed abroad and holding Indian passports subject to certain conditions.
Q16). While purchasing real estate most developers demand a Power of Attorney in their favor, is there a way to avoid it?
Ans: One can choose not to grant the Power of Attorney (POA) to the developers. However this will mandate the mailing of all documents to your foreign residence and associated time delays. A good compromise is to grant the POA to the builder only for specific necessary items. If you are an NRI or a Property Buyer/Investor you need to understand your Investment Horizons in Real Estate pretty well.
Term of Investment -
This is important as you need to hold on for at least 1 to 3 Years for a decent capital appreciation and if you sell your property within 3 years you are in for a short term capital gains which is at par with the Income Tax rules of nearly 30 to 35% as applicable. It is better to stay invested for 3 years and then plan the next investments with Capital Gains etc.
Pre-Launch offers -
Investing in property means also an entry load by paying stamp duty and registration fees and other incidental charges to the Builder etc. If you are investing it is always wise to invest as soon as the project is launched as this gives you enough time for appreciation as usually the builder goes in the Stock Market kind of a mode in the first year of its property by hiking the prices every few months.
Know your Builder -
It is imperative to know your Builder and the project as at the time of your exit the builder has to be extremely co-operative, the first question to shoot when you are buying an Under Construction Project is - If I sell what happens? When can I Sell? Will you charge me some transfer fees? How the paper work will be done between the Seller, Builder and the Buyer?
Invest with Deep Thought -
The present market is volatile in Mumbai and it is imperative for you to give a deep thought on various accounts, which begins from the Project, Infrastructure available within the Project, Outside the project in the neighborhood, Selling prospects, Leasing prospects, Neighborhood development, Distances to Schools, Markets, Malls, Hospitals, Highways, Airports, Railway stations etc. These should act as your analysis points.
For NRIs -
especially before coming to India, make sure you are carrying most of the relevant papers with you. You should always have an NRE and an NRO account in India and if you are looking to invest in Mumbai then one should have an account in Mumbai for easiness. Review your NRI allowances by the Government of India every budget etc.
Home Loans -
You can set off your EMI's if you invest wisely in a property as the rates are presently around 8% and your rental returns are around 4-6%. You can be a happy man if you do this fool proof homework as your EMI can be hedged off against the rent receipts to a certain degree.
Re-Sale Properties
In a booming market every property owner wants to encash his property at the best value. A few issues which we face is the commitment level of the seller and we can stumble on to good transactions at times, but this is more of a time consuming process at times. The repair value, old building and other property documentation issues can be challenging in certain transactions. Returns - It is always advisable to take a conservative approach in both Capital Appreciation and Rental returns. However one can safely expect appreciations anywhere upwards of 15% Per Year and Rental Yields of 4 to 6%.
Commercial and Malls -
The opening of new Malls is surely a good sign but one has to be very careful in investments in Malls and Commercial real estate. The returns though can be constant, but for smaller players the Malls and Commercial complexes can be too hot to handle as the outgoings are pretty steep and there is a huge difference between the built up and carpet ratio. It is excellent for self use and business or for a pre-leased option.
Q17). What are the options available for obtaining guarantors while applying for a HDFC/LIC loan
Ans: One will need a guarantor for a loan mainly for collateral security. The guarantor will have to demonstrate appropriate net worth to cover for the loan. Usually one can have a guarantor in any city where the loan issuer has a branch. Talk to loan issuers they will work something out for NRIs and foreign banks.
Q18). What are the criteria regarding avail of home loans for NRIs in India?
Ans: According to Reserve Bank guidelines for NRIs
The loan amount shall not exceed 85% of the cost of the dwelling unit.
Own contribution, which is the cost of dwelling unit financed less the loan amount, can be met from direct remittances from abroad only through normal banking channels, your Non-Resident (External) [NR (E)] Account and /or Non-Resident (Ordinary) [NR (O)] account and /or Non-Resident Special Rupee account [NRSR] in India.
Repayment of the loan, comprising of the principal and interest including all the charges are to be remitted from abroad only through normal banking channels, your Non-Resident (External) [NR (E)] Account and /or Non-Resident (Ordinary) [NR (O)] account and /or Non-Resident Special Rupee account [NRSR] in India. Q19).Can an NRI give a Power of Attorney to a person in India for completion of loan formalities on their behalf?
Ans: Yes. We very well understand that as an NRI you have a different set of needs with respect to your real estate management and investment requirements and we also understand that it needs
special set of services to cater to your requirements. The good news from India is that government has allowed 100% repatriation for NRIs. Reserve Bank has granted general permission to certain financial institutions providing housing finance e.g. HDFC,LIC Housing Finance Ltd.,etc. to grant housing loans to non-resident Indian nationals for acquisition of houses/flats for self-occupation subject to certain conditions.
Q20). How much loan can one get?
Ans: You can get a Home Loan of up to 85% of the Total Consideration Value.
There is no need to hurry as you are investing your hard earned money. Everyone has got different set of mind for owning their dream home.
Broadly categorized, Non-Resident Indians qualifying for NRI housing loans are:
* Indian citizens who stay abroad for employment or for carrying on business or vocation outside India or for any other purpose in circumstances indicating an indefinite period of stay abroad;
* Government servants who are posted abroad on duty with the Indian missions and similar other agencies set up abroad by the Government of India where the officials draw their salaries out of Government resources;
* Government servants deputed abroad on assignments with foreign Governments or regional/international agencies like the World Bank, International Monetary Fund (IMF), World Health Organization (WHO), Economic and Social Commission for Asia and the Pacific (ESCAP);
* Officials of the State Government and Public Sector Undertakings deputed abroad on temporary assignments or posted to their branches or offices abroad.
Documents required for Resident Indians as well as for NRIs for getting Home Loans are different in some respect. Home loans for NRIs are available for construction of new house / flats, purchase of old house / flat addition / alteration to an existing house and repairs / renovation etc. NRIs can avail of loans by mortgaging an existing residential property. However, for availing home loans, NRIs have to fulfill certain conditions according to provisions of the Income Tax Act. They should have stayed in India for a period of 182 days or more within an assessment year or they should have stayed in India for at least a total of one year or more.
The FDI Policy that permits FDI up to 100% from foreign/NRI investor under the automatic route has boosted NRI confidence. Banks have attractive NRI housing schemes to accommodate the housing needs of NRIs. From the stables of HFCs, NRI housing finance plans with suitable repayment options are available.
Last but not the least, NRIs should take due care while selecting their home loan provider companies or HFCs. Considering the geographical distances involved, it is significant that loan seekers associate with a proactive and responsive HFC.
ELIGIBILITY:
The eligibility criteria of NRIs differ from Resident Indians based on a few parameters. The parameters include:
Age: The loan applicant has to be 21 years of age.
Qualification: The NRI loan seeker has to be a graduate.
Income: The loan applicant has to have a minimum monthly income of $ 2,000 (although, this criterion may differ across HFCs).The eligibility is also determined by the stability and continuity of your employment or business.
Payment options: The NRI also has to route his EMI (Equated Monthly Installments) cheques through his NRE/NRO account. He cannot make payments from another source say, his savings account in India.
Number of dependants: The eligibility of the applicant is also determined by the number of dependents, assets and liabilities.
An NRI applicant is eligible to get a home loan ranging from a minimum of Rs 5 lakhs to a maximum of Rs 1 crore, based on the repayment capacity and the cost of the property, which although is variable by the priorities of the home loan provider. Also Home Loan Tenure for NRIs is different from Resident Indians.An applicant will be eligible for a maximum of 85% of the cost of the property or the cost of construction as applicable and 75% of the cost of land in case of purchase of land, based on the repayment capacity of the borrower.
However, a NRI can enhance his loan eligibility by applying for home loans with a co-applicant who has a separate source of income. Also, the rate of interest for home loans to NRIs is higher than those offered to Resident Indians. The difference is to the extent of 0.25%-0.50%. Some HFCs also have an internally earmarked 'negative criterion' for NRI home loans. As such, the NRIs who hail from locations that are marked as being 'negative' in the books of HFCs, find it difficult to get a home loan.
RBI DIRECTIVES FOR HOME LOANS
The Reserve Bank of India (RBI) has clarified that Non-Resident Indians (NRIs) and Persons of Indian Origin (PIO), purchasing immovable property in India should pay for the acquisition by funds received in India through normal banking channels by way of inward remittance 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 directive for sanctioning home loans to Non-Resident Indians. The guidelines provided are:
The home loan amount should not exceed 85% of the cost of the dwelling unit, as the remaining amount that is 15% needs to be provided an own contribution towards the cost of unit financed.
The cost of dwelling unit which is own contribution financed less the loan amount, can be met from direct remittances from abroad through normal banking channels, the Non-Resident (External) [NR(E)] Account and /or Non-Resident (Ordinary) [NR (O)] account in India.
However, repayment of the loan, comprising of the principal and interest including all the charges are to be remitted to the HFC from abroad through normal banking channels, the Non-Resident (External) [NR(E)] Account and /or Non-Resident (Ordinary) [NR (O)] account in India.
The repayment option for NRIs as they can pay through the funds held in any non-resident account maintained in accordance with the provisions of the Foreign Exchange Management Act, 1999, and the regulations made by the RBI from time to time. As most of the home loan provider companies consider the economical stability of the applicant, home loans for NRIs are quite feasible, because they are well in economic resource.
REPAYMENT OPTION
The repayment option for Non-Resident Indians (NRIs) is done in EMIs, and includes interest and principal amount calculated on monthly rests. The borrower can pay EMIs by issuing post-dated cheques from your Non Resident External (NRE)/Non-Resident Ordinary (NRO) or Non Resident (Special) Rupee Account (NRSR) in India; or any other account approved by the Reserve Bank of India (RBI).
In the case of part-disbursement of the loan, the monthly interest is payable only on the disbursed amount. EMI is payable every month, by the end of the month from the date of each disbursement up to the date of commencement of EMI. Pre-EMI is calculated at the same rate at which EMI is calculated.
Step Up Repayment Facility
By the step-up repayment option, a borrower can apply for a higher range loan based on the prospects of growth in income for years to come. In this repayment option the loanee has to pay less EMI in the initial years which increase as the income grows with the coming years.
Flexible Loan installments Plan
In this mode of repayment, the borrower has flexible loan installment facility where a borrower nearing retirement age can opt for paying higher EMI in the initial years and gradually move to paying lower installments after reaching retirement age.
Tranche Based EMI
Tranche Based EMI is a special facility offered to the customers so as to save their interest, in cases when customers purchasing an under construction property need to pay interest (on the loan amount drawn based on level of construction) till the property is ready. In such cases, customers can fix the installments they wish to pay till the property is ready. The minimum amount payable is the interest on the loan amount drawn. Anything over and above the interest paid by the customer goes towards principal repayment. The customer benefits by starting EMI and hence repays the loan faster.
Accelerated Repayment Scheme
Accelerated Repayment Scheme for NRIs offers a great opportunity to repay the loan faster by increasing the EMI. Whenever you get an increment, increase in your disposable income or have lump sum funds for loan prepayment, the loanee can benefit by
* Increase in EMI, which means faster loan repayment
* Saving of interest because of faster loan repayment You can invest lump sum funds rather than use it for loan prepayment.
A NRI loanee can opt for repayment ahead of schedule, by remittances in abroad through normal banking channels, your NRO / NRSR in India. However, by regulations in many states in India, the Agreement of Sale between the builder and purchaser is required to be registered by law. It is therefore advisable to record the agreement for registration within four months of the date of the Agreement at the office of the Sub Registrar appointed by the State Government, under the Indian Registration Act, 1908.
HOME LOAN TENURE
The home loan tenure for Non-resident Indians differs from the Resident Indians on a few points, which may of course vary from one HFC to another. For most HFC the home loan tenure exceeds maximum from 25 to 30 years. However, for NRIs the maximum tenure is from 7 years up to 15 years.The number of years fixed by RBI. However, you cannot opt for a term that extends beyond your attaining retirement age or 60 years of age (whichever is earlier).
TAX BENEFITS
NRIs cannot claim tax benefits on home loans in India as they have to pay tax in the nation where they work and earn. Moreover, you need to file tax returns to become eligible for home loans. However, if they pay tax in India for income earned in India, they can claim tax rebate for the home loan.
DOCUMENTATION
The documentation required to be submitted by the NRIs are different from the Resident Indians as they are required to submit additional documents, like copy of the passport and a copy of the works contract, etc. And of course NRIs have to follow certain eligibility criteria in order to het Home Loans in India.
Another vital document required while processing an NRI home loan is the power of attorney (POA). The POA is important because, since the borrower is not based in India; the HFC would need a 'representative' 'in lieu of' the NRI to deal with and if needed. Although not obligatory, the POA is usually drawn on the NRI's parents/wife/children.
Following documents needed for obtaining NRI home loans:
Passport and Visa
A copy of the appointment letter and contract from the company employing the applicant.
The labor card/identity card (translated in English and countersigned by the consulate) if the person is employed in the Middle East Salary certificate (in English) specifying name, date of joining, designation and salary details.
Bank Statements for the last six months
List of Classified documents for Salaried and Self Employed NRI Applicants
Salaried NRI Applicants • Copy of valid passport showing VISA stamps
• Copy of valid visa / work permit / equivalent document supporting the NRI status of the proposed account holder
• Overseas Bank A/C for the last 3 months showing salary credits
• Latest contract copy evidencing Salary / Salary Certificate / Wage Slips
Salaried NRI Applicants
• Passport copy with valid visa stamp • Brief profile of the applicant and business/ • Trade license or equivalent document • 6 months overseas bank account statement and NRE/ NRO account • Computation of income, P&L account and B/Sheet for last 3 years certified by the C.A. / CPA or any other relevant
Property Documents:
• Original title deeds tracing the title of the property for a minimum period of the last 13 years.
• Encumbrance Certificate for the last 13 years.
• Agreement of sale /construction, if any
• Receipts for payments made for purchase of the dwelling unit.
• Approved plan / license.
• ULC clearance /conversion order etc.
• Receipts for having invested the margin money through normal banking channels from the Non-Resident (External) account in India and / or the Non-Resident (Ordinary) account in India.
• Latest tax paid receipt.
• Allotment letter from the co-operative society / association of apartment owners.
• Agreement for sale / sale deed /detailed cost estimate from Architect / Engineer for property to be purchased / constructed /extended / improved.
• Copy of approved drawings of proposed construction/purchase/extension.
Additional documents to be submitted by Person of Indian Origin
• Photocopy of PIO card.
• If the PIO card is not available, photocopies of any of the following documents:
• The current passport, with birthplace as 'INDIA'
• The Indian passport, if held by the individual earlier.
• Parents/grandparents Indian passport/birth certificate/marriage certificate substantiating the individuals claim as a person of Indian origin.
Useful Links:
EMI Calculators
NRI LOAN CALCULATOR
HOME INSURANCE PREMIUM CALCULATOR
Websites of Banks in India
Public Sector Banks
Private Sector Banks
Associate banks of SBI
Foreign Banks
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Q13). Can authorized dealer grant housing loan to non-residents of Indian nationality where he is a principal borrower with his resident close relative as a co-obligator/guarantor or where the land is owned jointly by such NRI borrower with his resident close relatives?
Ans: Yes. However, in such cases the payment of margin money and repayment of the loan installment should be made by the NRI.
Q14). Can NRIs obtain loans for acquisition of house/flat for residential purpose from authorized dealers/financial institutions providing housing finance?
Ans: Reserve Bank has granted general permission to certain financial institutions providing housing finance e.g. HDFC, LIC Housing Finance Ltd., etc., and authorized dealers to grant housing loans to non-resident Indian nationals for acquisition of a house/flat for self-occupation subject to certain conditions. The purpose of the loan, margin money and the quantum of loan will be at par with those applicable to housing loans to residents. Repayment of loan should be made within a period not exceeding 15 years out of inward remittance or out of funds held in the investor's NRE/FCNR/NRO accounts.
Q15). Can Indian companies grant loans to their NRI staff?
Ans: Reserve Bank permits Indian Firms/Companies to grant housing loans to their employees deputed abroad and holding Indian passports subject to certain conditions.
Q16). While purchasing real estate most developers demand a Power of Attorney in their favor, is there a way to avoid it?
Ans: One can choose not to grant the Power of Attorney (POA) to the developers. However this will mandate the mailing of all documents to your foreign residence and associated time delays. A good compromise is to grant the POA to the builder only for specific necessary items. If you are an NRI or a Property Buyer/Investor you need to understand your Investment Horizons in Real Estate pretty well.
Term of Investment -
This is important as you need to hold on for at least 1 to 3 Years for a decent capital appreciation and if you sell your property within 3 years you are in for a short term capital gains which is at par with the Income Tax rules of nearly 30 to 35% as applicable. It is better to stay invested for 3 years and then plan the next investments with Capital Gains etc.
Pre-Launch offers -
Investing in property means also an entry load by paying stamp duty and registration fees and other incidental charges to the Builder etc. If you are investing it is always wise to invest as soon as the project is launched as this gives you enough time for appreciation as usually the builder goes in the Stock Market kind of a mode in the first year of its property by hiking the prices every few months.
Know your Builder -
It is imperative to know your Builder and the project as at the time of your exit the builder has to be extremely co-operative, the first question to shoot when you are buying an Under Construction Project is - If I sell what happens? When can I Sell? Will you charge me some transfer fees? How the paper work will be done between the Seller, Builder and the Buyer?
Invest with Deep Thought -
The present market is volatile in Mumbai and it is imperative for you to give a deep thought on various accounts, which begins from the Project, Infrastructure available within the Project, Outside the project in the neighborhood, Selling prospects, Leasing prospects, Neighborhood development, Distances to Schools, Markets, Malls, Hospitals, Highways, Airports, Railway stations etc. These should act as your analysis points.
For NRIs -
especially before coming to India, make sure you are carrying most of the relevant papers with you. You should always have an NRE and an NRO account in India and if you are looking to invest in Mumbai then one should have an account in Mumbai for easiness. Review your NRI allowances by the Government of India every budget etc.
Home Loans -
You can set off your EMI's if you invest wisely in a property as the rates are presently around 8% and your rental returns are around 4-6%. You can be a happy man if you do this fool proof homework as your EMI can be hedged off against the rent receipts to a certain degree.
Re-Sale Properties
In a booming market every property owner wants to encash his property at the best value. A few issues which we face is the commitment level of the seller and we can stumble on to good transactions at times, but this is more of a time consuming process at times. The repair value, old building and other property documentation issues can be challenging in certain transactions. Returns - It is always advisable to take a conservative approach in both Capital Appreciation and Rental returns. However one can safely expect appreciations anywhere upwards of 15% Per Year and Rental Yields of 4 to 6%.
Commercial and Malls -
The opening of new Malls is surely a good sign but one has to be very careful in investments in Malls and Commercial real estate. The returns though can be constant, but for smaller players the Malls and Commercial complexes can be too hot to handle as the outgoings are pretty steep and there is a huge difference between the built up and carpet ratio. It is excellent for self use and business or for a pre-leased option.
Q17). What are the options available for obtaining guarantors while applying for a HDFC/LIC loan
Ans: One will need a guarantor for a loan mainly for collateral security. The guarantor will have to demonstrate appropriate net worth to cover for the loan. Usually one can have a guarantor in any city where the loan issuer has a branch. Talk to loan issuers they will work something out for NRIs and foreign banks.
Q18). What are the criteria regarding avail of home loans for NRIs in India?
Ans: According to Reserve Bank guidelines for NRIs
The loan amount shall not exceed 85% of the cost of the dwelling unit.
Own contribution, which is the cost of dwelling unit financed less the loan amount, can be met from direct remittances from abroad only through normal banking channels, your Non-Resident (External) [NR (E)] Account and /or Non-Resident (Ordinary) [NR (O)] account and /or Non-Resident Special Rupee account [NRSR] in India.
Repayment of the loan, comprising of the principal and interest including all the charges are to be remitted from abroad only through normal banking channels, your Non-Resident (External) [NR (E)] Account and /or Non-Resident (Ordinary) [NR (O)] account and /or Non-Resident Special Rupee account [NRSR] in India. Q19).Can an NRI give a Power of Attorney to a person in India for completion of loan formalities on their behalf?
Ans: Yes. We very well understand that as an NRI you have a different set of needs with respect to your real estate management and investment requirements and we also understand that it needs
special set of services to cater to your requirements. The good news from India is that government has allowed 100% repatriation for NRIs. Reserve Bank has granted general permission to certain financial institutions providing housing finance e.g. HDFC,LIC Housing Finance Ltd.,etc. to grant housing loans to non-resident Indian nationals for acquisition of houses/flats for self-occupation subject to certain conditions.
Q20). How much loan can one get?
Ans: You can get a Home Loan of up to 85% of the Total Consideration Value.