Can a US-based NRI Buy a Home Loan in India? #AskSwitchMe
Updated on January 29, 20195 mins read
Mahesh reached out to us a few days ago. Currently an IT engineer working in U.S., he is thinking of settling down in India once his H1B visa expires. In a move towards that goal, he plans to invest in a beautiful 2 BHK apartment in Navi Mumbai. Swamped with work at his bustling office in Texas, he wants to buy a home loan without having to come to India to oversee the whole procedure. That’s not all, he has many more concerns about going ahead with the application itself. Here are a few excerpts from the conversation our expert Home Loan Advisor had with the NRI Mahesh.
What Factors do Banks Consider Before Giving Home Loans to NRIs?
Banks consider a variety of factors before handing you the home loan you desire. Though these criteria vary from bank to bank, they will generally look a your income in the country you’re employed, your overseas credit score, and your payment track record. Apart from that, the bank will also ask for a copy of the work permit in the country you are working. When it comes to the property, the process is just as meticulous. They will carefully go over its age, the land that it’s built on, the builder involved, and even the type of land. In case you want to buy an old property, banks might ask you to bring the society’s NOC too. All this is done to ensure that both you and the bank will be on the safe side before making such a big investment. Consider SBI, for example. They offer a loan specially tailored towards NRIs. The criterion for an NRI loan with SBI is that the candidate should be 18 years of age with a regular source of income. You will also need a valid passport and have to be working abroad (or have a job contract) for at least 2 years.
How Can I Repay My Home Loan?
You can use either your Non-Resident External (NRE) or Non-Resident Ordinary (NRO) account to repay your loan. However, do make sure that when you make the payments, you are doing them in Rupees and not in any other currency.
I’m Looking at a Couple of Properties Which Are Under Construction. Can I Still Get a Home Loan for Them?
NRIs enjoy the same benefits as residents when it comes to property investments. This means that even if you are buying a property that is under construction, you won’t have any trouble getting the home loan of your choice. Also for properties that need alterations to an existing plot, as an NRI, you won’t be facing any limitations whatsoever. In short, you enjoy the same privileges as someone who is actually living in India.
Do I Have to Be Physically Present in India While Taking The Loan?
Banks have set up a process wherein you can give a Power of Attorney to a close blood relative or your spouse and let them carry out the procedure on your behalf. However, it is a time consuming process and the Power of Attorney needs to be executed in India itself, so you might need to come down for that. Also, there is an element of risk involved in trusting the biggest purchase of your life in the hands of someone else. A Power of Attorney basically gives them complete permission to do whatever they want with the property. This is why banks are very particular when it comes to transacting on such cases.
What Are the Drawbacks of Being an NRI when Buying a Home Loan?
As an NRI, you won’t be able to repay your loan over as long a period of time as residents do. Since banks find the repayment capacity of NRIs to be much higher than resident Indians, they often shorten the loan repayment tenure for NRIs. Consider ICICI Bank, for example. The tenure for resident Indians who have a home loan with ICICI ranges from 3 to 30 years. For NRIs, on the other hand, the bank offers a lowered tenure of 20 years. Similarly, DHFL too has a maximum tenure of 20 years for NRIs Secondly, based on our experience, buying a home loan while living abroad is a much more tedious process than say if you were living in India. Since banks consider it a riskier move to hand over a loan to someone overseas, they take strong measures to verify the identity and repaying capacity of the customer. As a result, you will have to provide a more solid paperwork, a process that is much more complex than one for residents. For example, apart from appointing an overseas guarantor, NRIs are often asked for copies of their guarantor’s passport and visa to their banks. Some banks like ICICI also demand driving license and the income documents of the guarantor. This can cause a lot of inconvenience for both the home loan buyer and the guarantor. A home loan is one of the biggest purchases you will make in your life. Handing over a Power of Attorney to carry out this purchase for you does come with its own risks and anxieties.
Are There Any Precautions I Should Take Before Buying a Home Loan as an NRI?
If you choose a reputed bank and the paperwork is sound, you should have no trouble acquiring possession of the house you want. However, we strongly advise against hiring ‘agents’ who make vague promises. Also, keep in mind that only selected banks that are mandated by RBI are eligible to provide you with home loans. It is always a good idea to double check the bank’s website before going ahead and making the biggest decision of your life.
Go ahead, Ask SwitchMe! Have you had any problems with buying a new home loan? Or are you an existing home loan owner who is unsatisfied with the service? Either way, feel free to email us your problems. We will be happy to answer them in our upcoming posts.
SwitchMe is a registered trademark of SwitchMe Technologies Private Limited. SwitchMe does not claim the right to use any logo/ trademark other than its own. SwitchMe does not represent any other company, bank, or organization in relation to its services.