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September - 2014 - Special issue > Home Buyer's Guide

Guiding Light for NRI Property Buyers

Sukanya Kumar
Founder & Director-RetailLending.com
Sunday, September 21, 2014
Sukanya Kumar
Optimism is the biggest trend today in real estate. There is a positive feeling and environment amongst developers and homebuyers. Having been cautious for some time now, homebuyers and investors are keenly looking at real estate as a lucrative investment option. Moreover, there is an anticipation that the interest rates would drop near the end of the current financial year, which will add further impetus to the sector.

Hurdles in the Path

In the era of new hopes and abundance of opportunities, India is the new focus for the investment opportunities in every pitch. Being one of the promising emerging countries of the world, Indian real estate sector certainly is to be a chosen destination among global investors. There are a number of Indians who have settled abroad for a better career opportunity and growth. Despite the luxuries that life provided there, they tend to miss the land they have grown-up. A place in the homeland usually gives a sentimental support and sense of security, which is a prime reason of investment in real estate by NRIs.

While, processes and procedures have been designed to favour NRIs, there is a lack of awareness amongst NRIs that has led to misconceptions. These misconceptions are the biggest roadblocks for NRI property buyers. Following are a few common misconceptions that NRI property buyers have when obtaining home loans.

Myth #1 General Power of Attorney can be given only to blood relatives

Home loans have become one of the safest financial products as far as the banking industry is concerned. This has led to a number of lenders in India entering this domain with an array of products customized towards the customers need to borrow. Though certain banks like ICICI, Axis Bank insist that power of attorney should be given only to blood relatives in India, there are lenders such as HDFC and Standard Chartered bank where this is not a policy. In other words NRIs can give general power to any person whom they trust including friends and associates.

Also, there are certain banks like HSBC, Citibank who have developed mechanism where the NRI does not need to have a General Power of Attorney to take a loan, making it convenient for the NRIs to borrow from banks in India. They of course have other various checkpoints & include a blood relative as a local co-applicant for the loan.

Myth# 2 NRIs gets lesser tenure and have to pay higher rate of interest than resident Indian

This is the most common myths where NRIs feel that because they have a relatively higher income than resident Indians, their loan period is short and the rate of interest is higher. To be very precise loan tenure and rate of interest for resident and NRI is the same. In case of a change in status from NRI to Resident, the loan is reworked according to revised income and interest applicable is charged and the tenure is also revised. Some lenders do have a reduced tenure in offer, but majority of lenders do away with such condition.

Myth #3 NRIs from Middle East cannot get loan in India, as they don't pay income tax

Just like other countries NRIs from Middle East can purchase a property in India and avail a home loan. All they need to do is to submit additionally is a copy of their work permit. The card needs to be translated in English by Government authorized translators.

Myth #4 One has to visit India in person at least once while the loan is under process, to be able to get a home loan in India

To avail a home loan in India, it is not necessary for NRIs to visit the place at any stage. One just needs to have all documents in place including passport copies, valid visa, work permit, contract of employment, work experience certificate etc. and submit to banks upon doing self-attestation.

Myth #5 NRIs without an Indian passport cannot buy property in India

Foreign nationals or individuals with foreign passports can buy property in India if they are of Indian origin and avail home loans too. All they need to do is to present their PIO card along with other requisite documents.

Ladder to Climb

Investing in real estate in India can be quite tricky if one is not aware of all the norms and conditions involved. Following are few points that NRI investors need to consider when purchasing property in India.

Clear Property Title: The name of property should be clear from issues and the seller should have the required right to sell it, especially if it is inherited or any joint property.

No Dues Certificate (NDC): Always check that there will be no outstanding electricity/water bills or any other authority dues pending with the property. Take a no dues certificate from the seller at time of purchase.
Bank Release Letter: It is advisable to take the bank release letter from the concerned bank, if the property had been mortgaged as security in any type of loan.

Permits: The property of sale should have all approvals and permits from the civic authorities in terms of construction

Regions with Future Prospects for NRIs / Emerging Regions / Rewarding Regions for the Future

Mumbai and Bangalore due to their cosmopolitan culture have been popular cities for NRIs to invest in India. Other popular cities witnessing the real estate boom include Pune, Hyderabad, Chennai, and Ahmadabad.

Bangalore will surely be the best bet for NRIs to invest in this year with many new launches, good demand and resilient prices.






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