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.

Preferred property options for first time buyers

There is a broad distinction between first time home buyers and second time buyers. First time buyers shall be making such a huge investment for the first time in their life which is why they invest a lot of time in researching the market. Unless extremely lucky, it may be the only asset of this scale, they purchase which is why they take into account every possible information before making a decision.

  

Studies have revealed that there are certain recurring traits among first time home buyers across different cities. Some of these recurring trends have been explored below:

First time buyers prefer purchasing apartments:

      Roughly 7 out of 10 first time buyers prefer purchasing an apartment over row houses or builder floors.

Apartments are cheaper and provide all the amenities that are needed to live a good life. Home buyers of Tier I and II cities prefer purchasing apartments mostly. Usually home buyers prefer buying 2 and 3 BHK properties.

         Preference for ready to move in properties over under construction ones:

This can be considered to be paradigm shifts in terms of the buyer’s psyche. Even some time ago, first time buyers preferred buying under construction properties because they were less expensive. However, most buyers prefer to buy ready properties because of delays in under construction ones. A lot of first time buyers also prefer to buy houses in communities which are under construction but offer possession within 2 years. Ready to move in properties offer rent saving and tax deduction up to Rs 2 lakhs per annum on the interest paid on home loans. The only issue with ready to move in properties is that they are more expensive compared to under construction ones. However, buyers are willing to go that extra mile.

       End usage is the dominant cause behind property purchase:

Usually first time buyers prefer to purchase an apartment for living in it rather than subletting it for rental income. First time buyers usually live in rented accommodations which they want to give up when they buy a property. Only a handful of first time buyers prefers to buy properties for subletting it to others or earning capital gains from it or tax benefits.

       Property purchase is for families rather than self-occupation:

First time buyers usually prefer to buy properties to live in with their families. They would rather buy apartments or houses with multiple rooms to accommodate the 3-5 members of the family. Only a handful of people prefer buying single room apartments for self-occupancy.

       Location and pricing are the two most important considerations for purchasing a property for first time buyers

Prime locations and budget are the two most essential points which are considered by first time buyers. Surveys have revealed that price is the top most consideration while locations came close second. Other parameters that a first time buyer must consider is connectivity to different areas via public transport, builder reputation, closeness to work, social amenities and size. Home buyers essentially look for properties in India which are closer to their preferred location, within limited budgets. It can be seen that over the past 10 years, that capital appreciation has been seen in areas which are well connected and close to prime locations more compared to other areas.