Loans are an ideal financial aid, especially when there is a need for a large amount of funds. Various individuals apply for a loan when the occasion calls for it. There is a certain process along with the submission of certain documents to avail of this aid. The NRI loan is no different. This loan is available to NRIs’ and follows the similar process. However, this loan is not like rest of them. It has a unique requirements and challenges. Here are three most important details you must know about NRI loans.
A NRI Loan Is A Different Package:
With a NRI loan, especially when it comes to gathering finances for a home, NRI citizens may find that this is more complex than just taking up a local home loan. Both these financial aid will require different types of documents, will have different tenures and different modes of repayments. Repayments can be done through the NRO or the NRE account. The interest rates are also higher compared to the local rates through Home Emi Calculator. To put it into perspective, NRI home loan rates are normally 0.25 to 0.50% higher. But, NRI and local residents need similar amounts as a down payment for the loan.
Owning A Home Is More Challenging:
A NRI home loan will have fixed purposes which cannot be used for any other use. This will include self-construction of property on a plot of land, financing the purchase of a plot of land that is allotted by a society or a development authority, renovation or improvement of an existing property in India or a purchase of a house that is either under construction, sale or on a resale.
This form of credit can be used for a secondary home too. It can be used for income tax rebate too. However, NRI home loan will require a long list of documents. In most cases, NRIs cannot make this acquisition without a local support. You will also need to submit your income details from the foreign country, which complicates it furthermore.
Tax Benefits Are Tougher But Available:
NRI citizens will have to pay tax in the current nation where they are working and earning. But, if there is substantial income from Indian resources, they will need to pay tax to the Indian government too. NRI’s, though, can claim any tax benefits on their housing loan in India as well. It should be noted that gaining eligibility for a NRI home loan is not easy. But, it is the best source of tax rebate available for NRI’s.
Now you know the different facts that go into making a NRI loan the product it is. These loans have several other benefits too that should be researched about. The Indian government has currently ensured that, if any Indian origin individual wishes to return home in the near future, he or she is more than welcome to do so. Thus, it is wise to invest in that option as and when you are able.