Frequently asked questions.

NRI

  • An Indian citizen who stays abroad for employment/carrying on business or vocation outside India or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad is a non-resident. (Persons posted in U.N. organisations and officials deputed abroad by Central/State Governments and Public Sector undertakings on temporary assignments are also treated as non-temporary assignments are also treated as non-residents). Non-resident foreign citizens of Indian origin are treated on par with non- resident Indian citizens (NRIs).

  • A person of Indian origin means an individual (not being a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan) who:

    held an Indian Passport at any time, or who or whose father or paternal grandfather was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955

  • The Reserve Bank of India (RBI) has granted general permission to NRIs, PIOs and foreign citizens to invest in real estate for their residential purpose. The general permission covers only residential and commercial property.

  • NRIs can purchase commercial, as well as residential property in India (except for agricultural land, farm house & plantation property) provided the purchase consideration is met either out of inward remittances in foreign exchange through normal banking channels or out of funds from the purchaser's NRE/FCNR accounts maintained with banks in India. In this case, a declaration has to be submitted to the Central Office of Reserve Bank in form IPI 7 within a period of 90 days from the date of purchase of the property/final payment.

  • The payment of the purchase should be made out of the funds received in India through the financial options made available by the Indian. In case the funds are held in a non-resident account, that account should be maintained in accordance with the provisions of the Act and the regulations made by the Reserve Bank.

  • Yes, NRIs can sell their residential/commercial property without the permission of RBI. If the property is purchased by another PIO, funds towards the purchase consideration have to be remitted to India or paid out of balances in NRE/FCNR accounts.

  • As per the general permission granted by RBI, NRIs are allowed to receive financial assistance in the form of housing finance from certain financial institutions namely, HDFC, LIC Housing Finance, IDBI etc. Housing loans can be availed in rupees. Even though the criteria regarding the purpose of the loan are at par with those applicable to the resident citizens, the repayment period of the loan should not exceed 15 years.

  • Yes. The housing loan of an NRI or a PIO can be repaid by his/her close Indian relatives.

  • NRIs have different eligibility criteria in order to get home loans in India. A copy of the passport, copy of work contract is a must. Having a power of attorney (POA) may not be obligatory but it is nevertheless very important as the financial institute would want a representative since the borrower is not based in India. Here is a general list of documents needed for NRIs to obtain home loans:

    Passport & Visa Appointment letter and contract from the employing company Bank statement for the last six month Labour card/identity card More documents may be needed depending upon the requirements of different banks.

  • The following individuals (except from Pakistan and Bangladesh) are eligible to apply under OCI scheme:

    Who is a citizen of another country, but was a citizen of India at the time of or after, the commencement of the constitution; or Who is a citizen of another country, but was eligible to become a citizen of India at the time of the commencement of the constitution; or Who is a citizen of another country, but belonged to a territory that became part of India after the 15th day of August, 1947; or Who is a child or a grand-child or a great grandchild of such a citizen; or (b) A person, who is minor child of a person mentioned in clause (a); or(c) A person, who is a minor child, and whose parents are citizens of India or one of the parents is a citizen of India; or(d) Spouse of foreign origin of a citizen of India or spouse of foreign origin of an Overseas Citizen of India Cardholder registered under section 7A, Citizenship Act 1955, and whose marriage has been registered and subsisted for a continuous period of not less than two years immediately preceding the presentation of the application under this section. Provided that no person, who is or had been a citizen of Pakistan, Bangladesh or such other country as the Central Government may by notification in the Official Gazette, specify shall be eligible for the registration as Overseas Citizen of India Cardholder.

  • NRIs/OCB’s are granted the following facilities:

    Maintenance of bank accounts in India Investments in securities / shares of, and deposits with, Indian firms / companies Investments in immovable properties in India

  • Yes, the Reserve Bank has granted general permission to NRIs to acquire or dispose of NRI India Properties by way of gift from or to a relative who may be an Indian citizen or a person of Indian origin (PIO) whether resident in India or not.

  • Under the general permission available, the following categories can freely purchase immovable property in India:

    Non-Resident Indian (NRI) – that is a citizen of India resident outside India Person of Indian Origin (PIO) – that is an individual (not being a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan), who

    At any time, held Indian passport, or Who or either of whose father or grandfather was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955).The general permission, however, covers only purchase of residential and commercial property.

  • NRIs/OCB’s are granted the following facilities:

    Maintenance of bank accounts in India Investments in securities/shares of, and deposits with, Indian firms/companies Investments in immovable properties in India

Home Loan

To be eligible for a home loan, the applicant must be at least 21 years of age with a regular source of income from employment or self-employment. The loan must terminate before or when the applicant turn 65 years of age. The applicant should also possess at least 6 months of income proof.

  • Most lenders would consider any property bought during the last 3 -6 months as a regular home loan application. You would be eligible for the same rates and income tax benefits as any other home loan. However, if you delay and the property purchase becomes more than 6 months old it will be treated as Loan against Property. The rates for the same are higher and there would be no tax benefits as well.

  • You would not be eligible for a loan as most home loan lenders allow only immediate relatives to co-own a property. This means that a parents-son combination and a husband-wife combination are only allowed. The reason for this restriction is that if some dispute arises between the joint borrowers, their incomes might not be pooled any longer and there might be a problem in repaying the loan to the bank.

  • Yes, a single woman can get a loan. Till a few years back, banks hesitated to give loans to single women fearing loss of income after marriage. With double income families becoming the norm rather than exception, lenders now are lending to single women as well. Many lenders also have special schemes for women offering them a discount up to 0.25%.

  • Most home loan lenders offer special privileges to self-employed professionals. They recognize the fact that in such cases, income is generally under stated and the earning potential of such individuals is higher that what has been disclosed. Every Housing Finance Institution (HFI) has its own conditions regarding the type of professionals they would cater to. The HFI also decides on the qualifications required for such professionals to qualify for the relaxed norms for loan eligibility calculations.

  • Yes, you can have as many loans against different properties. The only criteria being that you should be able to repay all the EMIs every month.

  • Yes, loan for land purchase is available as long as it is for residential purposes only.

    Many mortgage lenders like HDFC and State Bank of India offer this loan. You can get up to 85% of the purchase amount based on your credit profile and paying capacity. You get no tax breaks if you take a loan to buy a plot of land. But, if you take a loan for construction, that means a loan to build a house on that plot of land, then you can get a tax break. In such a case, the tax benefits are available on both portions of the loan the one to purchase the plot and the one taken to construct the house thereon. Please note that the benefits under Section 80C and Section 24 can be availed only when the construction of the house is complete.

  • As per the general permission granted by RBI, NRIs are allowed to receive financial assistance in the form of housing finance from certain financial institutions namely, HDFC, LIC Housing Finance, IDBI etc. Housing loans can be availed in rupees. Even though the criteria regarding the purpose of the loan are at par with those applicable to the resident citizens, the repayment period of the loan should not exceed 15 years.

  • Yes, Non Resident Indians can avail of a NRI housing loan to buy a property in India. However, the loan disbursement process as well as the terms & conditions for a loan taken by a NRI are different than regular home loans granted to Indian residents.

  • Many builders get their projects ‘pre-approved’ by specific home loan lenders. The lender examines the legal documents of the title of that project, the stage of construction as well as the builder’s track record to complete the project in time. It then declares all properties in the project to be ‘pre-approved’. You do not need to go for legal and technical checks in case of a ‘pre-approved’ property.

  • You’ve chosen a property that’s yet under construction. So the lender makes the disbursement in parts based on the progress of the construction of your property. However till the housing loan is fully disbursed you have to pay simple interest at the rate you have agreed upon with the lender. This is known as the Pre EMI. And from the month following in which the full disbursement is made you will start paying your EMI.

  • Floor Space Index refers to the ratio of the built up area of a property to the area of the land on which it is built. An FSI of 60% would mean that the total built up area of the building can be equal to only 60% of the area of the land on which it is being built. There are FSI specifications released by the relevant municipal body or development authority for all construction in its area. It is also known as Floor Area Ratio (FAR).

  • A floating rate home loan is one where the home loan interest rate charged by the lender keeps changing with respect to the rates in the market over the tenure of the loan. Typically, the rate charged is on the basis of their cost of funds and the prevailing market rates. These rates change periodically. Accordingly the tenure increases or decreases or alternatively the EMI increases or decreases based on whether the rates move upwards or downwards. Every home loan lender decides whether to change the rate of interest or change the tenure at the time of sanction. It is advisable to go in for the floating rate if you feel that the interest rates have reached its peak and can only go downwards. Here are the latest offers on a 10 year floating rate home loan and 20 year floating rate home loan from the leading banks and housing finance companies in India.

  • Yes, you can convert floating rate home loan into a fixed rate one with no extra charges. However, to convert a fixed rate product to a variable rate product, most banks will charge a small fee. The swap can be done any number of times and at any point of time.

  • NRIs/OCB’s are granted the following facilities:

    Maintenance of bank accounts in India Investments in securities/shares of, and deposits with, Indian firms/companies Investments in immovable properties in India

  • The Fixed Rate of Interest ideally remains fixed over the tenure of the loan. This rate does not change after the final disbursement has been made. It is ideally suited for situations where you expect the rates of interest to go up in the future and this fluctuation in the rates does not affect you adversely. In cases where the disbursement is spread out over a period of time and the rates might have changed in the interim. The rate of interest would remain fixed at the final weighted average rate at which the loan was disbursed. Nowadays, many lenders are reserving the option of changing the rate on a fixed rate home loan after 3 or 5 years. So please read the fine print before you sign up for a fixed rate home loan.