NRIs are showing a lot of interest in investing in property back in their homeland. Not only is it less expensive but it gives them a source of passive income. When Indian residents wish to buy a home they have a variety of Home loans and other financing options to choose from. Similarly, when NRIs want to buy flats in Chennai, this article highlights what the financial provisions are.
NRIs are not allowed to deal with cash in property investment in India. Every transaction needs to be done through banking channels only. The payment cannot in any way be in the form of a foreign currency or traveller’s cheques. NRIs can purchase property in India, financed by a home loan that is taken in Indian Rupees from banks and lending companies that are dedicated to housing finance. In the event, the NRI is employed by a firm that has its headquarters in India, the home loan can also be granted by the said employer.
Process for NRIs to take Home Loan
NRIs can only invest in residential and commercial properties which makes flats in Chennai, a viable opportunity. The banks are also allowed to only finance these types of properties for NRIs. Alternatively, they are also eligible to buy non-agricultural land on which they can construct a house.
They can apply for home loans, both online and offline. Each bank or lending institution requires a particular set of documents to be submitted by the NRIs. The document set also changes depending on whether the NRI is a salaried employee or whether they are self-employed, and their current country of residence. They also need to submit their passport, visa, photographs, and proof of residence in the foreign country. These documents are mandatory in all cases.
Indian banks also require that the NRI should have spent a minimum period of stay in the current country of residence to make them eligible for the home loan. The banks are likely to ask for an acceptable co-applicant or an NRI guarantor when buying flats in Chennai. The guarantor has to submit proofs for their address, identity, and income.
Servicing the Home loan
Once the home loan is availed, NRIs can start making the EMI payments even from outside India. This has to be arranged through a proper banking channel or by debiting an NRE, NRO, or FCNR account. If the property is rented to tenants, the rental income can be set up towards payment of the EMI. One can also have close relatives transfer money to the NRO account, which can then be used to pay back the loan. If the buyers are themselves moving in, then the NRI can take the loan against their NRE or FCNR account, for home loan values on flats in Chennai of up to Rs. 1 Crore.
Sale of the property:
Under the absence of any legal complexities, an NRI is entitled to remit up to 1 Million USD per year, out of India, from their NRO, NRE, or FCNR Accounts. This amount can include money that has been remitted from the sale of a house or other property. However, the number of properties that they can sell and remit money from is restricted to two. These properties can either be from a purchase by the NRI in question or a property that has been inherited by them. The total value of the repatriated amount cannot exceed what is received as remittances from outside India, either for the purchase of the house or the servicing of the loan. This value is calculated in the currency of their current country of residence.
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