Myths and Facts Associated with Home Loans for NRIs in India

According to a UNestimate, around 16 million people are residing outside India, which is the largest for any country in the world leaving behind countries like Mexico and Russia. These Indians are usually referred to as Non-Resident Indians. Many of them are constantly in touch with their roots and often, after a long or short stint depending on their career, they usually settle in the country where they are currently working or shift their bases back to India. For the latter circumstance, one may want to possess a home of their own to their home country.

There are numerous myths and facts associated with Home Loans for NRIs in India, and this is partly either due to the lack of information or sometimes due to the abundance of it on the internet which hampers proper information gathering and clear decision making.

In this article, we will try to identify and bust the myths surrounding Home Loans for NRIs in India:

Myth 1: NRIs cannot buy property in India.

Fact: This is the most common myth which prevails among the NRI diaspora. Since the person will be holding a part of Indian citizenship, she will be eligible to opt for a Home Loan and then purchase a residential property (home) of her choice. This will, of course, happen after you complete the necessary documentation (which will differ than a general loan application for Indian citizens) and furnish proof of your income to ascertain your financial stability.

Myth 2: You can’t pursue Home Loan if you reside in a financially unstable/ non-friendly nation

Fact: Many times due to individual choices in one’s career, one may shift to a country which is not usually considered friendly to India or is politically or economically unstable. It is a myth that Indians residing in certain countries are not eligible to apply for a Home Loan. NRIs living in such countries can avail home financing facility, subject to permission from the Reserve Bank of India.

Myth 3: No Long Duration Loans, if you are an NRI

Fact: This is another myth which is widely popularised among the NRIs and is generally incorrect. In case your income source is stable and reliable, you can get a considerable tenure to pay off your Home Loan.

Myth 4: No Loan for NRI Entrepreneurs

Fact: Again it is true that salaried employees are much easier bets for financial institutions as compared to the self-employed ones, but if you manage to share the requisite financial details such as your monthly or yearly income proofs, there should be no issues that should stop the entrepreneurs from getting their desired amount as a Home Loan.

Myth 5: No joint loans can be availed if you are an NRI

Fact: If you have a family relative in India as a co-applicant and he/she are to become joint owners of the property, Home Loan is quite easy to avail, and this isn’t a roadblock in the way of purchasing a property in India even if you are an NRI. 

Myth 6: NRI’s have to personally come down to India to apply for a Home Loan

Fact: If you have appointed a power of attorney in your name in India, there is no need for you to visit the country. These days, online portals are available where one can upload all necessary documents to complete the loan procedures, and the person with a power of attorney can take care of the rest of the formalities.

Myth 7: People of Indian Origin (PIO) cannot be homeowners in India

Fact: This statement is also not true. Usually, a person of Indian origin will be in possession of a PIO card, which after presenting to the relevant authorities can be utilised in buying a home or property in India.

Myth 8: Power of Attorney can only lie with a blood relative

Fact: This statement is not entirely true as in some cases the banking authorities will allow you to appoint a person with the power of attorney who is not necessarily a blood relative and is your friend or a colleague from work.

Myth 9: Repaying the loan with your current Non-Indian Bank is possible

Fact: Remember that all transaction taking place while purchasing the desired property or home is taking place in Indian Rupees and hence you have to have access to accounts with NREs or NROs (Non Resident Rupee or Non Resident Ordinary Rupee) or banks which have the facility to conduct transactions in Indian Rupee.

Myth 10: The rate of interest is considerably higher for NRIs

Fact: This used to be a reality previously, but now the provisions have been revised to suit the requirements and financial requirements of the NRIs better. Now, banks have virtually eliminated any bias, and NRIs can truly get almost the same rate of interest as their Resident Indian counterparts.

There has been a long-standing myth that prevails till date that NRIs are usually financially well-off as compared to the resident Indians, and don’t necessarily require a Home Loan.  But this is not the case.Many NRIs usually residing and working in the Middle East and African nations almost always come back and that is when they require the solace of their own homes. The rules have become extremely favourable for NRIs to comfortably avail the Home Loan of their choice and to build their own dream home. At the same time, they are advised to stay clear from the above-mentioned myths and carry out extensive due diligence to avoid getting trapped in certain loopholes.

Also Read: What are the Home Loan Options For an NRI?

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