How do NRI Home Loans differ from Resident Home Loans?

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Owning a home is an aspiration for many Indians. This longing does not end even after moving overseas. Buying a property in the homeland is a prideful prospect. Hence, Non-Resident Indians gravitate toward property investment. It serves as a part of their retirement planning. However, buying a house involves considerable cost, which takes years of corpus accumulation.

But waiting for sufficient capital is not a wise move as the property rates increase owing to inflation. Hence, banks offer financial assistance via Home Loan for NRI. As foreign income has greater value than Indian currency, you get charged a higher interest rate. Also, the other Loan terms have varied rules compared to resident Home Loans. Understand these distinctive requirements to plan a successful Loan application:

Eligibility criteria

The standard eligibility parameters remain the same regardless of the Loan time. They include your age, credit score, financial standing, income status, employment, etc. Additionally, lenders assess your NRI status to judge your NRI Home Loan eligibility. They follow the Reserve Bank of India's definition. You are an NRI if you hold an Indian passport and extend your stay overseas beyond 182 days in a financial year.

Loan amount

Lenders are free to use their discretion while finalising the lending amount. They do this after reviewing your application. But they must follow a standard in setting the maximum amount for NRI Home Loans. You get up to 70% to 80% of the property value as the sanctioned amount. Some banks also use your gross monthly income as the yardstick. You get 30-40 times your income as the maximum Loan amount.

Repayment terms

You must repay the Loan amount in the pre-determined equated monthly instalments. They get spread across the Loan tenure based on your flexibility. The source of funds either includes International Remittances or Bank Transfers. You require Non-Resident External or Non-Resident Ordinary Accounts for the latter. The criterion is to pay the NRI Home Loan amount in Indian currency.

Tenure and interest rate

The Resident Indians get up to30 years to repay the borrowed amount. Contrarily, the tenure for NRIs gets limited to 15-20 years. The reason is the higher-earning capacity and increased value of the foreign currency. Banks may extend this duration in exceptional cases. Also, the NRI Home Loan interest rates are higher than regular Home Loans. 

Power of Attorney

As you reside overseas, it helps to appoint somebody to transact in your absence. Banks provide the option of selecting a power of attorney for this purpose. Your spouse, children, parents, or a resident guardian qualifies as POA. They get the right to submit property-related papers and perform other formalities on your behalf. Use this provision for convenience in managing Home Loan for NRI in India.