Obtaining housing finance is one of the smartest ways of purchasing a property in India. You can easily tackle the costs involved and get some much-needed financial assistance. However, there are numerous differences in the loan application process for resident Indian and NRI borrowers, including the home loan interest rates, tenures, documentation involved, etc.
Here’s a detailed look into the difference between the two types of loans.
The prerequisites involved
As a basic prerequisite, all home loan applicants can apply for a home loan using the following documents:
- Address proof (NRIs must provide their current overseas address)
- Loan application with three passport-size photographs
- ID proof (voter ID, driver’s licence, passport, or PAN)
- Residence/address proof (recent copy of water bill, electricity bill, telephone bill, passport, Aadhaar, driving license, or piped gas bill)
- Documents for proof of business
- Income proof – last three months’ salary slip, last six months’ bank statements (showing salary credits), previous salary slips, etc.
- Some lenders may also ask for proof of business of at least five years (for self-employed individuals/business owners)
However, there are a few extra prerequisites for NRIs. These include:
- You must be at least 24 years of age
- A resident Indian must be the co-borrower/co-applicant or the property’s co-owner.
- Attested copies of valid Visa and Passport
- CDC (Continous Discharge Certificate) copy for NRI applicants currently in the Merchant Navy
- The government of India issued PIO Card (for PIOs only)
- All documentation attestations must be done by Representative offices or Indian Consulate/Embassy, or Overseas Notary Public.
- You must provide bank account details for your overseas account and Indian accounts if any.
- As income proof, you must furnish a valid work permit and an employment contract (translated in English in case of it being in any other language).
- Some lenders can ask you for salary slips attested by your local Embassy.
Eligibility requirements
The home loan eligibility conditions are relatively straightforward for resident Indians than NRIs. Lenders will check your CIBIL score, credit history, age, income, and financial position, among other factors.
For NRI borrowers, lenders may have a set of specific rules. Most lenders only provide up to 75% of the total property value as the loan amount. They can check your gross monthly income to determine your loan suitability. Lending institutions may also check your educational documents and overseas salary record to decide if you’re eligible.
Interest rates
Usually, home loan interest rates are relatively the same for NRIs and resident Indian applicants. However, some lending institutions can charge NRIs a slightly higher interest rate, with an increment ranging from 0.20-0.70%.
Tenures
Resident Indian applicants can receive a maximum loan tenure of up to 30 years. For NRIs, this usually gets capped to 20 years. However, that’s also under the lender’s discretion. Some NBFCs may also offer loan tenure of up to 30 years to NRIs.
In conclusion
So, there you go. These are the general differences between NRI and resident Indian loans. Need one? Simply head over to your preferred lenders’ website and check out your home loan eligibility.
