The Foreign Exchange Management Act (FEMA), 1999, defines NRIs as persons residing outside the country due to their employment, business or any other purpose in a situation that requires them to remain outside India for a period of uncertain time. Anyone who meets this definition can apply for a home loan in India. Although an NRI can avail of a home loan with similar simplicity and convenience as a normal resident, there are several elements that distinguish NRI home loans from standard loans in India.
Higher Interest Rate:
In contrast to the interest rates that Indian residents must pay on a home loan, NRIs generally must pay 0.25 to 0.5 percent more expensive interest.
Shortest tenure:
NRIs provide mortgage loans for a relatively much shorter maximum term of between 5 and 15 years, while standard loans from various banks can last up to 30 years. The reason behind this limited tenure lies in two commonly noted facts: NRIs’ greater ability to repay the slow amount and their general willingness to borrow comparatively shorter tenures.
Covered Cost Percentage:
Unlike standard mortgage loans, the amount, available through NRI loans, covers at most 80-85 percent of the total value of the property in question. And this amount credited by banks is subject to the gross monthly income (GMI) of the borrower.
Payment method:
NRIs can only repay their EMI loans in the form of direct remittances through normal banking routes, which comprise their Non-Resident Ordinary (NRO) and Non-Resident External (NRE) accounts in India. Also, to ensure security, most banks insist on keeping the first mortgage associated with the property in your name.
No tax benefits:
NRIs, not having a source of income within India, do not have the ability to claim tax refunds on Indian home loans as they must pay taxes in the country identified with their occupation and income.
In short, NRI loans are quite different from standard loans in India due to a number of security and repayment capacity factors. If you are an Indian, you will take advantage of the different plans and schemes. In case you are a non-resident Indian, you will have completely different plans and schemes. Therefore, in light of the above, if you aspire to take loans, it is necessary that you gather all the necessary knowledge and information about each and every aspect of the loans that will be sanctioned to resident and non-resident indigenous people. . A smart step will allow you to fulfill your purpose with complete peace of mind.