Tips to follow for NRI Home Loans before buying a house in Gurugram
Indians who have not resided in the country for 183 or more days and are residing in another country are called NRIs. There are lots of profitable investment opportunities for non-resident Indians (NRI) in the Indian real estate market. Just like Indian residents, NRIs can also purchase properties in India, by using home loans. However, it is important to note that the home loan rules are not the same for Indian residents and NRIs. NRIs willing to buy a house in Gurugram can take home loans to simplify their purchase process. Before proceeding for property to buy in Gurgaon, NRIs can follow the below tips to easily take a home loan.
1) Eligibility criteria for NRI home loan applicants:
- At least 2 years of work experience in the country where they are residing, at the time of loan application
- The maximum allowed loan tenure is 20 to 30 years.
- The maximum age permitted for taking a home loan is up to 60 years.
- The loan-to-value (LTV) ratio depends on the applicant’s income and age
2) Meet the Power of Attorney (PoA) requirement:
Before buying a house in Gurugram, the NRI home loans must fulfill the PoA requirements. Lenders need a Power of Attorney (PoA) when granting home loans to NRIs. The reason is they live in a foreign country and the lender requires somebody in India to handle this.
Many banks need a PoA to simplify the processes of handling an NRI customer. Note that the PoA holder only obtains the powers the lenders give; they don’t possess the power to deal with the property.
The NRI must offer General Power of Attorney (PoA) in support of a local relative according to the bank’s draft. It should be duly verified by the Indian consulate in his/her resident country. If the loan borrower is in India, the POA can be notarized locally.
3) Understand the transaction medium:
Before deciding on a property to buy in Gurgaon, an NRI should focus on the transaction medium. The property is to be purchased in India, so all the transactions must be conducted in Indian currency and through Indian banks. To ensure this process happens seamlessly, an NRI must have an NRE/ NRO account in an authorized Indian bank. An NRE account helps an NRI in converting and using the income in India from overseas.
4) Make funds arrangement:
Whether to buy luxury homes in Gurgaon or other residential properties, the NRI should arrange for 20% of the property value from his/her income sources. Using the tripartite agreements, the builder can assist you in getting loans at cheaper interest rates. Hence, an NRI can opt for that and decrease his/her financial burden.
5) Get familiar with ways for repayment of NRI home loan:
- The repayment of an NRI home loan can happen in the following ways:
- By debit to his/her FCNR (B)/NRE/NRO account
- From rental income from the property
- By inward remittance via a standard banking channel
- Through the close relatives of the borrower, as stated in section 6 of the Companies Act, 1965. This happens from their account in India after crediting the loan account of the borrower.
6) Know the NRI home loan tax benefits:
Similar to Indian residents, NRIs can obtain some tax benefits on interest payments. This is applicable if they have any income chargeable to tax in India.
As per Section 80C of the Income Tax Act, 1961, NRIs are qualified for tax benefits on their home loans if they file their income tax returns in India. The corresponding tax deduction is for the home loan’s interest component and the principal component.
7) Know the maximum amount of NRI home loan:
Similar to Indian residents, NRIs willing to buy apartment in Gurgaon or other residential property can get home loans of 80-85% of the total amount of the particular property prices in Gurgaon. The exact amount depends on the credit score, the property’s flat value, and other aspects.
However, NRIs have restrictions on some prerequisites such as current job profile, qualifications, and previous experience. There are also restrictions on the possibilities of continuing abroad for the loan term and the possibility of servicing the loan with a longer tenure in case they return to India.
Conclusion:
If you are an NRI and want to buy a house from the luxury projects in Gurgaon, the aforementioned tips can help. Following the eligibility criteria and the stated requirements can simplify the home purchase process.