BOMBAY, 1 December 2003 — Buying a home has never been this easy. Apart from getting to choose modern and well made homes, making arrangements for paying the money has become very easy. A few years back, buying a home was like life time ambition, something which only the wealthy could do. Then came home loans. Earlier getting a loan meant cutting through a plethora of red tape and months of agonizing wait to get the loans sanctioned. Now things have changed drastically, for the better.
Today there are many companies offering home loans and that too at very attractive interest rates. And gone are the days when one had to wait for long to get the money, now loans get sanctioned with a week to 10 days. The best part is that, nowadays, the personnel from the banks come to your home or work place, do all the paperwork, even click your photograph for free and on top of all this, sanction the loans in a jiffy.
For the non resident Indians (NRIs) also owning a home in their homeland is easier now. It is no longer a nightmare and is infact the best way to channelize the earnings. NRIs can continue earning abroad and at the same time, channelize some amount to buy the long cherished home.
The Reserve Bank of India (RBI) has granted some accredited housing finance companies and banks the permission to provide funds to NRIs for the purpose of acquiring a house for self-occupation. RBI has stipulated that all NRIs holding a valid Indian passport can apply for a housing loan. NRIs, who are of Indian origin but do not possess an Indian passport don’t qualify for an NRI home or land loan.
The process for obtaining home loans is more or less the same for resident Indians and NRIs, except that NRIs need to furnish more papers. A typical list of documents that need to be attached include copies of passport, visa, bank statement — both domestic and international — for the last 6 months.
NRIs also need to submit employment/residency related documents, latest salary slip and work permit and identity card issued by current employers.
NRIs also need to submit property related documents.
Loans can be availed upto a maximum of 85 percent of the cost of the property.
Own contribution can be met from direct remittances from abroad through normal banking channels, the Non-Resident (external) (NRE) account and /or Non-Resident (ordinary) (NRO) account in India. Repayment of the loan, comprising of the principal and interest including all the charges are to be remitted from abroad through normal banking channels, the NRE Account and /or NRO account in India.
If you have a work experience for more than 3 years or hold a minimum 1-year contract, a home loan may not be difficult to get. Also, most banks prefer their NRI customer to be more than 25 years old. NRIs can apply for the loan either individually or jointly. Proposed owners of the property, for which the loan is being sought, will have to be co-applicants. However, the co-applicants need not be co-owners.
One thing which demarcates the residents from the NRIs is the repayment period. While a resident Indian can take a loan for long time periods like 25 years, NRIs cannot avail of such long tenures. NRIs earning around $30,000 per annum can avail a loan for 1 to 5 years while those earning more than $42,000 per annum can go in for a 6 to 10 years time period. These tenures vary yet on an average, the maximum period of repayment is around 7 years only.
Once all the papers have been submitted and duly scrutinized by the housing finance companies, the loan get disbursed either in full or in installments, depending on the repayment capacity. NRIs need to pump in their contribution, that is, actual cost of the property minus total loan amount sanctioned.
Payments for fees and charges are paid by remittances from abroad through normal banking channels. An NRI from the Middle East can pay the prescribed fee in UAE dirhams by check or demand draft drawn in favor of housing finance companies. A fee of 1.25 percent of the loan amount applied for i.e. Rs.12.5 per Rs.1,000 of the loan applied for is payable when the application form is submitted.
Another important point to be noted is that NRIs do not enjoy income tax benefits on home loans that the residents enjoy. Unless they file tax returns in India, they are not eligible for tax benefits.
Allahabad Bank, Andhra Bank, Birla Home Finance, BOB Housing Finance, Canbank, Citibank, Dewan Housing, Dena Bank, HDFC, Global Housing, ICICI, Tata Home Finance, PNB Housing, SBI, LIC are some of the prominent banks/housing finance companies which can be approached for making your dream of owning a home come true.