Loans are a commonly used form of finance. Mortgage loans remain a popular choice for both citizens and NRIs. It is a debt instrument that is secured by a specific real estate asset as collateral. Mortgage loans are also sometimes referred to as “claims or liens against property”.
The Ministry of External Affairs (MEA) has stated that NRIs/PIOs can mortgage commercial or residential property to a lending institution in India. Housing Finance Institutions remain the best option for availing mortgage loans.
However, if the NRI mortgaging property wishes to mortgage it to an institution located outside India, they need to apply for approval from RBI.
How Can NRIs Mortgage Property in India?
If you wish to get a loan against property (LAP) for NRIs, you need to follow the given steps:
Do preliminary research
It is best to do some research before contacting a bank or financial institution for a LAP. Compare rates of interest, terms and conditions, repayment procedure, and the tenure of the loan.
Keep your documents ready
Before your loan gets sanctioned, you need to get the following documents ready:
- Address proof (Passport/PAN Card/Driving license/latest utility bill)
- Income proof
Income proof includes passport details with relevant visa stamp, work visa, salary slips, overseas bank account receipts, and NRE/NRO account statements for salaried employees.
Self-employed NRIs need to show their trading license, profit and loss account, balance sheet, and income computation for the past three years made by a certified CA.
After you have all your documents in place, you can apply for the loan online. You can also visit the bank branch to submit the documents.
If you are an NRI mortgaging property in India, there are a couple of other things that you need to keep in mind, also:
- You will get a 45–55% loan-to-value ratio.
- Banks can sanction you a loan of up to ₹ 5 crores.
- The residential or commercial property that you wish to mortgage should be in your name or in the name of your parents, siblings, spouse, or children.
- The property should be a beneficiary under an insurance plan that provides sufficient financial coverage for losses due to fire, flood, earthquake, and other natural calamities.
Repayment of Mortgage Loan
NRIs have the following options available to repay their mortgage loan in India:
- Using the NRE account
- Using the NRO account
- Inward remittances
- Liquidation of Foreign Currency Non-Repatriable (FCNR) Account
- Relative’s bank account
- Selling the immovable assent on the basis of which the loan was received.
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