Individuals who possess Indian citizenship but reside outside of India are referred to as Non-Resident Indians (NRIs). Purchasing property in India can pose distinctive difficulties for NRIs, including challenges in securing financing through conventional methods due to strict eligibility criteria and regulations set forth by banks and financial institutions for NRI Home Loans. Nevertheless, with an increasing demand for NRI housing loans, there are now various options available in the market that cater to the specific needs of NRIs. These loans provide flexible repayment options and competitive interest rates.
What is the Maximum Home Loan Amount an NRI Can Avail of?
The amount that an NRI (Non-Resident Indian) can obtain on a Home Loan in India is dependent on various factors, including the policies of the lender, the borrower's repayment capacity, and the property's value. Typically, most banks and financial institutions in India offer NRI Home Loans with a maximum loan-to-value (LTV) ratio ranging from 75-90% of the property's value.
The maximum loan amount an NRI can avail of may differ based on different factors such as income, credit score, employment status, and more. While determining the loan amount, lenders typically take into account the borrower's ability to repay the loan, the property's location, market value, and other factors. Before applying for a Home Loan in India, it is recommended for NRIs to carefully assess their financial position and the loan's terms and conditions.
Factors that Affect Your Property's Market Value
It is imperative for property owners to have a good understanding of the market value of their property. The market value of a property is an estimate of the price at which it could be sold if it were put on the open market. This value is not static, and it can change over time due to several factors that influence the worth of the property.
Having knowledge of the factors that can affect a property's market value can help property owners make well-informed decisions about buying, selling, or refinancing their property. By evaluating these factors, property owners can get a better understanding of the current market value of their property, which can help them to make sound financial decisions.
Also Read: What Factors do not Affect CIBIL Score?
1. Location of the Property
The location of a property is an important determinant that significantly affects its market value. The market value of a property is typically higher if it is situated in an attractive neighbourhood or an area with excellent infrastructure and easy access to amenities. In contrast, properties located in less desirable locations may have a lower market value. Therefore, the location of a property plays a pivotal role in determining its market value, and property owners should consider this factor when estimating their property's value.
2. Property Type and Condition
The market value of a property can be influenced by its size, age, and condition. Properties that are more extensive, newer, and well-maintained generally tend to have a higher market value compared to smaller, older, and poorly-maintained properties. This is because larger properties provide more living space and amenities, while newer properties are equipped with modern features and technology. Similarly, well-maintained properties are more attractive to potential buyers since they require less maintenance and repairs. On the other hand, smaller, older, and poorly-maintained properties may have a lower market value since they offer less space and may require extensive repairs and renovations.
3. Amenities Offered
Modern amenities and features such as swimming pools, gardens, garages, and others can greatly impact a property's market value.
Interest Rates and Tenure for NRI Home Loans in India
Salaried NRIs can secure Home Loans at competitive interest rates with Bajaj Housing Finance. To know more about our housing loan interest rates, click here.
NRIs can benefit from a longer repayment tenure of up to 20 years. This ensures easy and manageable repayment.
Documents Required for NRI Home Loans in India
Planning to apply for a Home Loan with Bajaj Housing Finance? Here’s a list of documents*** that Non-Resident Indians (NRIs), Persons of Indian Origin (PIOs), Overseas Citizens of India (OCIs), and individuals serving in the Merchant Navy will have to submit:
- KYC documents such as proof of identity, address, and date of birth.
- A PAN Card is mandatory
- A valid PIO or OCI card for PIO/OCI applicants
- Employment-related papers like a valid visa and work permit, employer-issued ID card, and appointment letter
- Income proofs, including salary slips or certificates for the past three months, bank statements for the last six months, and tax returns for the previous two years (if applicable)
- Recent passport-size photographs
***This list is indicative. Additional documents may be requested at the time of loan processing.
How to Apply for an NRI Housing Loan?
If you are a Non-Resident Indian (NRI) planning to buy a property in India, you may need to apply for an NRI housing loan. However, the process of applying for an NRI housing loan may differ slightly from that of a regular Home Loan.
Here is how you can apply for an NRI housing loan:
- Make sure to check the lender's eligibility criteria before applying for an NRI Home Loan. Lenders have different criteria based on age, income, employment status, credit score, and citizenship status.
- When applying for an NRI Home Loan, you must provide several documents, such as proof of identity, income, employment, tax returns, and property-related documents. The exact documents needed may differ based on the lender's policies and your personal situation.
- There are numerous banks and NBFCs providing NRI housing loans. However, it is essential to conduct research, compare interest rates, repayment terms, and other features from different lenders. After that, select the lender that meets your requirements the most.
- After selecting a lender, you can apply for an NRI Home Loan either through their online portal or by visiting their branch office. You will need to complete the application form and attach all the required documents.
- Once you submit your application and documents, the lender will review them. If your application is accepted, the lender will provide you with a loan agreement that specifies the loan's terms and conditions.
- If you find the loan terms and conditions agreeable, sign the loan agreement, and the lender will disburse the loan amount.
*Terms and conditions apply.
Also Read: Benefits of Home Loans for NRIs in India
Tax Benefits for NRIs on Home Loans in India
Even as an NRI, when you avail of a Home Loan in India to purchase or construct residential property, you may claim the following tax deductions:
Principal Repayment under Section 80C: If you’re servicing a Home Loan, you may claim deductions on the principal component under Section 80C, with the overall cap being Rs.1.5 Lakh (for the combined 80C instruments) in a financial year. Stamp duty and registration charges on the purchase of a property can also be claimed under Section 80C. A key caveat: if you sell the property within five years of possession, the deductions may be reversed (i.e. added back to your income).
Interest Payment under Section 24(b):
Under Section 24(b) you may claim:
- For a self-occupied property: up to Rs.2 Lakh per year of interest paid
- For a let-out (rented) property: there is no upper limit on interest deduction; you can offset the full interest paid against the ‘Income from House Property’ head.
If the property is under construction, the full interest cannot be claimed until possession, but pre-construction interest may be claimed in equal instalments over five years after completion.
Frequently Asked Questions
NRIs (Non-Resident Indians) are eligible to apply for a joint Home Loan with either a resident Indian or another NRI, as long as the financial co-applicant is also a co-owner of the property. The income and credit score of the financial co-applicant will also be taken into account to determine the loan amount and eligibility.
Important guidelines for NRI housing loans include ensuring eligibility criteria are met, preparing necessary documentation, researching various lenders and choosing the best option, considering financial co-applicants, and understanding tax benefits available under Section 80C and Section 24(b) of the Income Tax Act, 1961.
The amount an NRI (Non-Resident Indian) can avail of as a Home Loan in India varies based on multiple factors such as the lender’s criteria, the applicant’s repayment capacity, and the property’s valuation. Generally, Indian banks and housing finance institutions extend NRI Home Loans with a loan-to-value (LTV) ratio ranging between 75% and 90% of the property’s market value.
If you are a salaried NRI (Persons of Indian Origin (PIOs), Overseas Citizens of India (OCIs), or an individual serving in the Merchant Navy) planning to apply for a Home Loan with Bajaj Housing Finance, you need to submit the following documents***:
- KYC documents such as proof of identity, address, and date of birth, along with a PAN Card (mandatory)
- A valid PIO or OCI card for applicants falling under these categories
- Employment-related documents like a valid visa and work permit, employer-issued ID card, and appointment letter
- Income proofs including salary slips or certificates for the last three months, bank statements for the previous six months, and income tax returns for the past two years (if applicable)
- Recent passport-sized photographs.
***This list is indicative.
NRIs can repay their loan over a flexible tenure of up to 20 years, basis approval and eligibility.
Yes, both resident Indians and Non-Resident Indians can be co-applicants for a Home Loan.
Yes, for individuals serving in the Indian Merchant Navy, loan repayments can be made through the applicant’s Non-Resident External (NRE) or Non-Resident Ordinary (NRO) account.
Typically, banks and housing finance companies in India offer NRI Home Loans with a loan-to-value (LTV) ratio of about 75% to 90% of the property’s market price.
Yes, NRIs can claim tax deductions on the principal and interest component of the Home Loan under Section 80C and Section 24(b), respectively.
