Quick checklist for people looking for property in India
The real estate market in India has always been a lucrative one for the non-resident Indians to invest in. the expatriates’ number putting the money in real estate in India has gone up in past some years. Also, some of the investment-friendly initiatives that are taken by present Prime Minister –led central government has actually raised the optimism among the investors.
In absence of well-defined regulator presently, however, non-resident Indians are at times faced with lack of credibility and transparency here. Also, they aren’t always used to various rules and regulations for eligibility, home loans, applicability, etc.
If you are a non-resident Indian looking to avail the home loan in India, here is a list of few things for you to keep in the mind while applying.
Documents required for non-resident Indian home loan
The documents that are required while applying for the home loan include passport as well as visa forms as the part of the Know Your Customer exercise; deputation or appointment letter; details of a permanent address in India; work experience certificate, contract of employment and work permit. Likewise, salary certificates and statements of the non-resident external and non-resident ordinary accounts supporting are also required. You need to provide foreign land address proof, verified by the employer along with tax return statements from a foreign land. To make sure loan eligibility, you need to have to present the qualification certificate. Furthermore, General Power of Authority in the format of the bank should be duly notarized.
Co-applicant for non-resident Indian home loan
The co-applicant and the GPA is compulsory for the non-resident Indian for the home loan in India. The GPA holder wither has to be the guarantor or co-applicant of the loan with the certain exceptions. Guarantor to loan is certainly must when a local resident is not available as the co-applicant.
Eligibility for non-resident Indian home loan
The level of income, as well as the educational qualification, plays a vital role in deciding the eligibility of loan. Graduation is a minimum qualification that one must hold to apply for the non-resident Indian home loan. The basis of eligibility is known if you actually are on deputation or have been permanently employed in India. The banks here take into account net income i.e. the income left after paying the taxes abroad when deciding the eligibility.
Minimum income norms
All these norms certainly differ from one bank to another. For example, in banks, $24,000 a year is considered to the minimum income level for the US-based non-resident Indians.
Tenure for non-resident Indian home loan
The tenure of the non-resident Indian home loan is much shorter than the regular home loan. The reason is that repaying capacity of the non-resident Indian is sup[posed to be much stronger than that of the Indian resident. Generally, the banks provide a home loan to non-resident Indian for a period of 15 years.
Loan to value ratio or LTV is the mortgage amount to appraised property value. The banks allow 80-85% of loan to value ratio to the non-resident Indians, subject to the monthly income. Another important ratio when applying for the home loan is fixed obligation to income ratio. This is basically the ratio of the fixed monthly installments that is payable to the monthly income. Banks push the fixed obligation to income ratio up to 60% for the non-resident Indians, depending on the income.
The interest rates for non-resident Indian home loans are similar to regular home loans.
Repayment and disbursement
The repayment of loan needs to be done in the Indian currency and can be paid through NRO or NRE accounts with the remittance from abroad. The probability of the bad loans is not really higher in case of the non-resident Indians as the property is in native land and can be seized by any bank anytime.
What may non-resident Indians don’t know is that the GPA holder has to be present in person on bank premises at time o the disbursement of the loan. His signature is needed on disbursement documents as the main applicant is not physically present in the country.
The loan appraisal for the non-resident Indian is done over the official email address. Each and every detail relevant for evaluating loan is discussed as well as confirmed by the email. The employment of applicant abroad is checked twice with her/his employer. You should certainly confirm human resource department beforehand to avoid the delay in loan appraisal. Also, the department can receive a call to verify the employee code, designation, purpose of transfer, etc.
There are no tax benefits for non-resident Indian customers taking a home loan unless they file the returns as well as become eligible to avail tax rebates available for such loans.