Few Things to Keep in Mind While Opting for NRI Home Loans - Home Loan Stories | Kotak Mahindra Bank
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06 MAY, 2021

The advancement of technology over the past few decades has made the world a smaller place. Because of globalization, people are more open to migrating to foreign countries in search of new job opportunities. This has led to an increase in the number of Non-Resident Indians (NRIs) in recent times. Keeping this in mind, several lending institutions have introduced the facility of NRI home loans for NRIs who are looking to purchase a property in India. Different lenders have different home loan eligibility criteria for NRIs. Moreover, the terms and conditions of NRI home loans may vary from one lender to another.

If you are an NRI looking to avail a home loan in India, then here are few things to consider

Things to Consider while Opting for NRI Home Loans

Rate of Interest and Loan Amount

In case of NRI home loans, the interest rate charged is usually little higher than the interest rate on regular home loans. This is because most lenders view NRIs as high-risk borrowers as they reside outside the country while servicing the loan.

The loan amount you can avail would largely depend on your educational qualification, monthly income, employment stability, job profile, and country of residence. When purchasing a property, you must try to pay a large amount as down payment. The lesser loan amount you avail, the more you can save on the interest pay-out. There could be specific rules or limitations for NRIs working and residing in some countries.

Documents Required

Keep all the necessary documents handy before applying for an NRI home loan. Some of the basic documents required to process an NRI home loan application are mentioned below:

  • A cancelled cheque
  • Passport copy
  • Passport size photograph
  • Valid work visa and permit
  • Work experience certificate
  • Salary slips
  • Bank statements of Non-Resident External (NRE) or Non-Resident Ordinary (NRO) accounts.
  • Property allotment letter
  • Power of attorney (if applicable)
    • The Power of Attorney is a document stating that the NRI borrower has given someone else the authority to make certain decisions and act on his/her behalf.

Loan Tenure and Repayment

NRIs can avail a home loan for a tenure of up to 15 years. However, lenders may take into consideration your profession and repayment capacity before deciding on the loan tenure. You can easily repay your home loan through the funds held in your NRO/NRE accounts. No other funds can be utilized for repayment of NRI home loan. Also, the repayment needs to be made in Indian Rupees only. In case you rent out your purchased property, you can also use the rental income derived from it to repay the home loan.  

Tax deduction

If you are an NRI paying tax in India, you can save on taxes by claiming the following deductions from the taxable income generated in India

  • As per Section 80C of the Income Tax Act, 1961, NRI borrowers can claim a maximum deduction of up to Rs. 1.5 lakh on the principal repayment of the home loans.
  • Under Section 24 of the Income Tax Act, 1961 the deduction is available for the repayment of interest on home loans up to Rs. 2 lakh.
  • Under Section 80EE of the Income Tax Act, 1961, NRIs availing home loans in order to buy their first home can an additional deduction of up to 50,000 on the interest repayment of home loan

Make sure that you keep these things in mind before applying for an NRI home loan. With us, you can easily apply for an NRI home loan through an online application process. Simplified documentation, attractive interest rate, and convenient loan disbursement process are some of the major perks of availing an NRI home loan with us at Kotak Mahindra Bank.

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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.