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NRI Home Loans vs. Standard Home Loans in India

The Foreign Exchange Management Act (FEMA) 1999 defines NRIs as persons residing outside the country for employment, business or some other purpose in a situation that requires them to stay outside of India for a period of uncertain time. Anyone who meets this definition can apply for a home loan in India. Although an NRI can benefit from a home loan with similar simplicity and convenience to a normal resident, there are several elements that distinguish NRI home loans from standard loans in India.

Higher Interest Rate:

In contrast to the interest rates that Indian residents have to pay for a home loan, NRIs generally have to pay 0.25 to 0.5 percent more expensive interest.

Shorter tenure:

NRIs make mortgage loans for a relatively much shorter maximum term of between 5 and 15 years, while standard loans from various banks can last up to 30 years. The reason behind this limited tenure lies in two commonly noted facts: a greater ability of NRIs to repay the slow amount and their general willingness to borrow comparatively shorter tenures.

Percentage of Covered Cost:

Unlike standard home loans, the amount available through NRI loans covers at most 80-85 percent of the total value of the property in question. And this amount credited by the banks is subject to the gross monthly income (GMI) of the borrower.

Payment method:

NRIs can only repay their EMI loans in the form of direct remittances through normal banking routes, comprising of their non-resident ordinary (NRO) and non-resident external (NRE) accounts in India. Also, to ensure security, most banks insist on keeping the first mortgage associated with the property in your name.

Without tax benefits:

NRIs, having no source of income within India, are not eligible to claim tax refunds on Indian home loans as they are required to pay taxes in the country identified with their occupation and income.

In short, NRI loans are quite different from standard loans in India due to a number of security and repayment ability factors. If you are an Indian, you will take advantage of the different plans and schemes. In case you are a non-resident Indian, you will have completely different plans and schemes. Therefore, in light of the above, if you aspire to take loans, it is necessary that you gather all the necessary knowledge and information about each and every aspect of the loans that will be sanctioned to resident and non-resident Indians. . An intelligent step will allow you to fulfill your purpose with complete peace of mind.