Averaging 15% annual capital appreciation per annum, investing in real estate in India has always been an attractive a proposition for NRIs, as it has been for resident Indians. In fact, the strengthing of the foreign currency against Indian rupees in recent years has played a starring role in attracting NRIs to Indian real estate – since they can build a high return asset in more economically manner.
The other motivation is to have a place to call home and to maintain connect with one’s homeland. Even the banks in India have introduced progressively designed NRI Home Loans to make home buying easier for NRIs.
However, the myths surrounding NRI home loans is a major hindrance for NRIs looking to take these loans. This table should help straighten things out: –
| MYTH | REALITY |
| As an NRI, you cannot apply for a joint home loan with a resident Indian. | The truth is, you can. However, the loan will be considered an NRI loan.That means that you will still be the primary applicant and the loan value will be determined on the basis of your income. You will also be responsible for paying the EMIs either through your non-resident external (NRE) account or through a non-resident ordinary (NRO) account opened jointly with the resident Indian. |
| An can give the POA (Power of Attorney) only to the blood relatives. | Barring a few banks and NBFCs, most lenders do not impose this condition. You can give the Power of Attorney to anyone that you trust. That includes your relatives, friends and associates. Some lenders are flexible to the extent that they do not even need someone of Indian origin to have the POA, in case a blood relative is a local co-applicant for the loan. |
| You have to visit India during the time the home loan is being processed. | While it is ideal to be available in India to oversee the formalities in person, it is not mandatory. The loan can be processed on the basis of your documents without you having to come to India |
| NRI Loans have lower interest rates and shorter loan tenures. | The reality couldn’t be more far from it. Home loans taken by NRIs have the same tenure and interest rate given to Indian residents.
If the status changes from NRI to resident, the loan gets restructured as per the new income and the interest rate and tenure also gets revised. |
| These cannot apply for home loans : · NRIs from Middle East, · PIO (Persons of Indian origin) · OCI (overseas citizenship of India) |
Let’s clear this one by one.
NRIs from Middle East can apply for home loans on the basis of work permit that’s duly translated to English by Government-authorized translators. PIOs can apply for home loans by submitting PIO cards along with the other required documents. As for OCIs, they can apply for home loans like other NRIs with the same criteria applicable. |
Just a word of advice : When they are investing in a property in India, ensure you approach a bank that has a presence in your country, as well as the city where the property you are purchasing is located.
With these myths demystified, you can apply your preferred NRI home loan in a more informed way and build a property for yourself in India.
