Real estate is looked upon as a favorable investment avenue as it gives substantial returns over a period. Moreover, having a house to live in is also essential, so house properties are in high demand in India. Whether it is resident individuals or Non-Resident Indians (NRIs), buying a house property is quite an in-demand activity. That is why lenders design and offer home loans for resident individuals as well as for NRIs. There are specifically designed NRI home loans that are available only for the NRIs who wish to buy house property in India. But are NRI home loans and regular home loans differ from one another?
Yes, regular home loans and NRI home loans are slightly different from one another. Here are the aspects in which they differ –
• Purpose of the loan
Resident individuals usually avail home loans to buy a house property for their residential needs. In the case of NRIs, however, since they do not live in India, the house property is usually bought for investment purposes. Moreover, since investment in a house through a home loan allows them tax benefits, they avail of a home loan in India for investing and also for claiming tax advantages.
• Eligibility parameters for the loan
The eligibility parameters for both these loans are different. Regular home loans are offered with simpler eligibility requirements compared to NRI home loans. In case of NRI home loans, the amount of loan offered is limited, the minimum income criterion is higher and the NRI’s financial position is assessed more thoroughly than in case of normal home loans. That is why NRI home loans can take some time in being sanctioned where normal home loans are sanctioned earlier.
• Loan repayment tenure
The loan repayment tenure also varies. Under regular home loans, the repayment tenure is longer going up to 30 years. However, in the case of NRIs, the loan repayment tenure is shorter. It is, usually, up to 15 years or 20 years. The reason for the short repayment tenure is that NRIs have a higher disposable income and can, therefore, pay off the loan sooner than resident Indians.
• Loan interest rate
NRIs are charged a higher interest rate on their home loans than resident Indians. There is a slight increase in the loan interest rate in the case of NRI home loans than regular home loans. This makes NRI home loans slightly dearer than normal ones.
• Loan repayment mode
Resident individuals can repay their home loans in cash or through their bank accounts. In the case of NRIs, though, the repayment procedure is required to adhere to the regulatory framework. NRIs are required to pay their home loans through their NRE or NRO bank accounts held with an Indian bank.
• Documents required
When resident Indians apply for a home loan, they would have to submit their identity proof, age proof, address proof, bank statements, occupation details, etc. However, in the case of NRIs, the documentation requirement is more elaborate. They are required to submit their passports, VISA, NRE/NRO statement, employment details, etc.
So, an NRI home loan is different from a regular home loan as the loan is specifically designed for NRIs. Understand the difference so that you can avail the most suitable loan.