A large number of banks and financial institutions offer NRI Home Loans that are customised to address the housing requirements of Non-Resident Indians (NRI), Persons of Indian Origin (PIO) and Overseas Citizens of India (OCI). Individuals in this specific category can avail of an NRI housing loan if they wish to purchase a residential property, construct a house on a plot of land or undertake extensive repairs/renovations of an existing property in India.
What is the CIBIL Score for NRI Home Loans?
When you apply for an NRI Home Loan, your CIBIL/credit score is among the first things lenders are likely to appraise. CIBIL or credit score is a three-digit numeric summary of your credit history, ranging between 300 and 900, which is based on past credit behaviour such as previous loans and repayment habits, reflecting your credit profile and ability to manage future credit.
How is CIBIL Score for NRIs Calculated?
Banks and financial institutions are required to share their customer information periodically with credit bureaus like TransUnion CIBIL, formerly Credit Information Bureau (India) Limited. Other similar agencies in India include Experia, Equifax and CRIF Highmark.
As per details received from lenders, credit bureaus compile the information and generate credit reports. They assign a credit score to each individual or organisation looking for credit on the basis of entries found in the ‘Accounts’ and ‘Enquiries’ sections of the CIBIL report with details of loan accounts and/or credit card payments, missed or delayed dues and so on.
What is a CIBIL Report?
CIBIL reports are consolidated credit reports comprising the consumer’s CIBIL score and credit summary, personal information, contact details, employment information and loan account information. Lenders examine both the CIBIL scores and the credit reports while assessing loan eligibility.
What is the Ideal CIBIL Score for NRI Home Loans?
A number closer to 900 is considered ideal for NRIs seeking Home Loans. Usually, a score of 750 or above has a higher chance of securing loan approvals. If you possess a score in this range, you can expect credit of a heavier principal sum at lower rates of interest and flexible repayment tenors. Moreover, you can also negotiate for better loan deals with favourable terms and conditions.
But if you have a lower CIBIL score, you might find it difficult to obtain suitable deals. You may be sanctioned lower amounts at higher Home Loan interest rates with shorter tenors. Further, you could be tendered more stringent terms making repayments tougher. In certain instances, you may even face loan rejection.
To avoid such a scenario, you can check your CIBIL score for free once a year; or multiple times a year by paying the specified fee. Just visit the official CIBIL website and enter the required details to receive your CIBIL score and report. If your score is on the lower side, you can undertake remedial measures to enhance your credit score before you apply for a loan.
Key Features of NRI Home Loans
Here are some distinguishing features of NRI housing loans:
Competitive Interest Rates
NRI Home Loan interest rates are comparable to regular Home Loan rates. The interest rates are determined by multiple factors like an applicant’s monthly income, loan amount, credit score, occupation and employer’s profile.
Higher Loan-to-Value Ratio
LTV ratio is the proportion of a property’s value that lenders can finance through the loan. It cannot exceed the regulations fixed by the RBI, which are:
| Loan Amount | LTV Ratio Limit |
|---|---|
| Up to Rs.30 lakh | 90% of the property’s value |
| Between Rs.30 lakh to Rs.75 lakh | 80% of property price |
| Above Rs.75 lakh | 75% of the house cost |
Longer Repayment Tenors
Lenders offer NRI Home Loans for longer tenors up to 40 years depending on the applicant’s repayment ability, which should ideally be restricted to 50% of their net monthly income so that they can handle the loan EMIs alongside their normal expenditures and family commitments
NRI Home Loan Balance Transfer
NRIs with existing house loans may access the balance transfer facility, subject to fulfilling eligibility requirements if they wish to shift their outstanding loan to other lenders for lower interest rates and attractive deals.
Other Fees and Charges
There may be various additional charges associated with an NRI house loan. For instance, you might be levied processing fees for up to 4% of the total loan amount, plus GST, as applicable. Also, even though you are not levied prepayment fees on a floating-rate loan, you could be charged zero to nominal fees for prepaying fixed-rate loans.
Eligibility Criteria for Availing NRI Home Loans
Lenders will consider several factors such as income, country of residence, educational qualifications, existing obligations, assets owned, work experience and more while evaluating the eligibility of NRI loan applicants. Eligibility parameters may vary based on your occupation profile and country of residence. However, the basic considerations usually include:
- Residential status - NRIs, PIOs and OCIs are eligible to apply for NRI Home Loans
- Age - Applicants must be between 23 to 60 years** old
- Credit Score - They must possess excellent credit scores over 750 and unblemished credit records
- Employment type - Both salaried and self-employed individuals can qualify for NRI housing loans
**The upper age limit is considered as age at the time of loan maturity. Additionally, the upper age limit for applicants is subject to change, depending on the property profile.
Documents Required for NRI Home Loans
Applicants are required to furnish the following documents*** to obtain NRI Home Loans:
- KYC documents: valid passport and visa copy, valid address proof
- Mandatory documents: PAN card or Form 60
- Identity documents: social security card, work permit, etc. issued by government departments of the country in question
- Letter issued by foreign embassy/mission in India
- PIO/OCI card issued by the Indian government
- Stamped and notarised declaration along with ration card, passport of parents/grandparents/spouse to establish Indian citizenship
- Income proof: Bank statements including NRE/NRO accounts for past 6 months, embassy-attested salary certificate
- Property papers: title deed, allotment letter, land tax receipt
- Other documents as required
***Additional documents may be required during loan processing.
Aspiring NRI housing loan applicants should scout around for ideal loan deals before selecting a lender who can offer them competitive rates and terms. They should make use of online tools like Home Loan EMI Calculators and Home Loan Eligibility Calculators to ensure loan affordability and also realistically examine their own ability to avail and service the loan. They can further utilise these tools to tailor the loan to their preferences for effective credit management.
*Terms and conditions apply.
Frequently Asked Questions (FAQs):
A credit score of 750 and higher is considered good for availing an NRI Home Loan.
You can check your CIBIL score once a year for free. You can also request your score multiple times in a year by paying the stipulated fee. Just visit the official CIBIL website and follow the given instructions. You can then receive your CIBIL score and report in your registered email address.
Each lender may set minimum requirements of an acceptable CIBIL score. While some lenders could offer NRI Home Loans with credit scores of 600, some may not do so. Hence, verify the details with your lender to avoid loan denial. Remember, even if you do receive a loan, you may not get favourable rates or terms increasing your overall credit cost.
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