The home loans segment has been growing at a robust rate over the past few years. Obviously, most of the growth has come from borrowers residing in India. However, non resident Indians also account for a portion of the home loans business. This article takes a look at home loans for NRIs and how they differ from home loans for resident Indians.

The home loan offering for both resident Indians as well as NRIs is fundamentally the same. The basic difference lies in the eligibility criteria. Given below are 3 such parameters across which home loans for NRIs differ as compared to those for resident Indians.

1. The NRI loan seeker has to be a graduate. The same is not necessarily the case for resident Indians- they can still qualify for a home loan subject to fulfilment of certain criteria. He also needs to have a minimum monthly income of $ 2,000 (this criterion may differ across HFCs). The NRI also has to route his EMI (equated monthly instalments) cheques through his NRE/NRO account. He cannot make payments from another source say, his savings account in India.

2. Another difference lies in the home loan tenure. Loans to Indian residents are available for a 20-year tenure. In fact, some housing finance companies (HFCs) even offer home loans on a 30-year tenure, if the applicant fulfils certain criteria. NRIs however can avail of a home loan only for a maximum of 15 years (depending on the HFC).

3. NRIs are also required to submit additional documents than is normally required for a resident Indian. For example, certain documents like a copy of the passport and a copy of the works contract (also sometimes referred to as the contract card/labour card) are required only for NRI loans.

Another important document required while processing an NRI home loan is the power of attorney. The POA is required because the borrower is not based in India and in such a scenario, the HFC would need a 'representative' 'in lieu of' the NRI to deal with. Although not mandatory, the POA is usually drawn on the NRI's parents/wife/children.

The rate of interest is another area that separates the NRI from the resident Indian. Home loans to NRIs are costlier. The difference is to the extent of 0.25 per cent-0.50 per cent. As is the case with loans for resident Indians, some HFCs also have an internally earmarked 'negative criterion' for NRI home loans. For example, certain locations are marked as being 'negative' in the books of HFCs. An NRI who hails from a negative location may find it difficult to get a home loan.

Finally, NRIs should take due care while selecting their HFC. Considering the geographical distances involved, it is pertinent that loan seekers associate with a proactive and responsive HFC.

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