Home Loan FAQs - Frequently Asked Question - Part - 3

Q1.  Are NRI/PIO/OCI eligible for Housing loans to buy property from any Indian Bank? 

Ans: An authorised dealer or a housing finance institution in India approved by the National Housing Bank may provide housing loan to a non-resident Indian or a person of Indian origin residing outside India. A maximum of 80 per cent amount is financed by the financial institution. The rest has to be given by the NRI.

For acquiring a residential property in India, the buyer is subject to the following conditions, namely:

a) The quantum of loans, margin money and the period of repayment shall be at par with those applicable to housing finance provided to a person residing in India.

b) The loan amount shall not be credited to Non-resident External (NRE)/Foreign Currency Non-resident (FCNR)/Non-resident non-repatriable (NRNR) account of the borrower.

c) The loan shall be fully secured by an equitable mortgage by deposit of title deal for the property  proposed to be acquired, and if necessary, also be lien on the borrower’s other assets in India.

d) The instalment of loan, interest and other charges, if any, shall be paid by the borrower by remittances from outside India through normal banking channels or out of funds in his Non-resident External (NRE)/Foreign Currency Non-resident (FCNR)/Non-resident Non-repatriable (NRNR)/Non-resident Ordinary (NRO)/non-resident Special Rupee (NRSR) account in India, or out of rental income derived from renting out the property acquired by utilization of the loan or by any relative of the borrower in India by crediting the borrower’s loan account through the bank account of such relative (The word ‘relative’ means ‘relative’ as defined in section 6 of the Companies Act, 1956.)

e) The rate of interest on the loan shall conform to the directives issued by the Reserve Bank of India or, as the case may be, the National Housing Bank.

Q2.  Which documents are required to buy a property in India?

Ans: The following documents are required for buying a property in India:

a) Pan card (Permanent account number)

b) OCI/PIO card (In case of OCI/PIO)

c) Passport (In case of NRI)

d) Passport size photographs

e) Address proof

Q3.  Which documents are required for a home loan?

Ans: For salaried individuals, the following documents are required:

a) Copy of employment contract

b) Latest Salary slip

c) Latest work permit

d) Bank statement for 4 months or NRE/NRO a/c 6 months statement

e) Passport/visa copy

f) Utility bill for address proof

g) PIO/OCI card

h) Power of Attorney (if applicable, in respective bank’s format)

i) Customer credit check report

j) Property agreement duly registered or other related docs

k) Income Tax returns last 2 years

For self-employed, the following documents are required.

a) Balance sheets and P&L a/c of the company for last 3 years

b) Bank a/c statements for the last 6 months for company and individual, both

c) Income tax returns (3 years)

d) Passport/visa copy

e) Utility bill for address proof

f) PIO/OCI card

g) Power of Attorney (if applicable, in respective bank’s format)

h) Credit check report

i) Property agreement or other related docs


Read Other: Legal NRI FAQ's, Tax NRI FAQ's.
                    
About the Author: Naveen Kr. Jain, VP, Head of Operations & Customer Services, IndiaHomes Property Group, is an MBA & LLB with 16 years of experience in operations and customer services. At IndiaHomes.com, he is responsible to ensure that all processes, policies and practices followed by the organisation are customer centric and should result in an optimal solution for the end user. Naveen has held senior leadership roles in ING Vysya Bank, HDFC Bank & Stock Holding Corporation of India. Being a certified six sigma black belt & ISO 9001: 2008 lead auditor, the implementation of quality management systems and standards for operational excellence have been Naveen’s key strengths and areas of focus.

How to select a holiday Home

You can buy a holiday home as a getaway apartment for your family to spend the weekends at it or you can simply rent it out to other vacationers as and when required. Nevertheless, you must bear these points in mind before buying a holiday apartment for yourself. 

Planning Ahead

The decision of purchasing such a house is a big financial commitment. It is important that you take into consideration the requirements of your family and whether you are choosing a house which you will enjoy visiting in the coming years. Most buyers have to take some kind of financial assistance when they decide to buy holiday homes and hence you should start thinking about mortgages and the affordability of the property in terms of maintenance cost. A holiday house can also be treated as an investment for the years post retirement. 

Attracting Vacationers

You should always seek the advice of a property consultant when you make the decision to purchase a specific property. You have to gain knowledge about the property market in the destination along with the tourism industry of the area where you are thinking of buying a property. For instance, some areas attract tourists only during winters or summers and you have to raise your maintenance costs and profit only within that time frame. You need to think of the kind of people who will be visiting the destination and what their needs might be. If you can match the property type with the needs of potential tenants, you will be able to reap enough profits to see you through the year. Usually tourism is down during school seasons or the monsoons (unless it is Khandala and Lonavala) and hence you have to account for the loss income when tourists do not go visiting.

Safety and Insurance

All rental properties have to obey to different safety standards. If guests become injured or sick because of unsafe environments, you may be facing a potential lawsuit in that case. All gas and electrical appliances have to be checked regularly and maintained so that they are safe enough for use. Your property should also conform to regulations of fire safety. 

As an owner, you also have to buy insurance for your property, irrespective of whether you are looking to let it out. If you are buying a house for personal use and want it in a location which is secluded so that you are away from the maddening tourist crowd, you should invest in CCTV cameras and sophisticated alarm systems for the safety of the property as houses which are away from the hustle and bustle of the city centre tend to attract burglars and intruders.

You may also read: Things to remember while selling your home