Loans for non-residents
NRI home loan finance is a developing segment
A premium several-services portal observes in a report that the home loans segment has been growing at a robust rate over the past few years. As it is understood most of the growth is attributable to the borrowers residing in India. It goes, Non Resident Indians (NRIs), however account for a small portion of the home loans business.
As the report observes the home loan offering for both resident Indians as well as NRIs is fundamentally the same. The basic difference lies in the eligibility criteria. The portal report enlists parameters across which home loans for NRI differ as compared to those for resident Indians. The first being that an NRI loan seeker has to be a graduate.The same is not necessarily the case for resident Indians- they can still qualify for a home loan subject to fulfillment of certain criteria. He also needs to have a minimum monthly income of $ 2,000 (this criterion may differ across HFCs). The NRI also has to route his EMI (Equated Monthly Installments) cheques through his NRE/NRO account. He cannot make payments from another source say, his savings account in India.
As the report goes, the second difference lies in the home loan tenure. Home loans to Indian residents are available for 20-year tenure. In fact, some housing finance companies (HFCs) even offer home loans on a 30-year tenure, if the applicant fulfils certain criteria. NRIs on the other hand can avail of a home loan only for a maximum of 15 years (depending on the HFC).
The third difference being NRIs are also required to fulfill some additional home loan documents than is normally required for a resident Indian. For example, certain documents like a copy of the passport and a copy of the works contract (also sometimes referred to as the contract card/labour card) are required only for NRI loans.
Another important document required while processing an NRI home loan is the power of attorney (POA). The POA is required because the borrower is not based in India and in such a scenario; the HFC would need a ‘representative’ ‘in lieu of’ the NRI to deal with.
Home loan rates is another area where lies a difference.