Loan Against Property for NRI: A Guide to Flexible Financing: Benefits, Eligibility & More in 2024

Being an NRI, you might have an aim or aspiration, and for that, you need some funding. The easiest way to meet the need is by availing a loan against property for NRI in India. These loans allow you to access the funds without selling off the property. This loan acts as a financial tool for an NRI for personal purposes or business expansions. In this blog, we will discuss the significance, purpose, and comparison of loans against property for NRIs.

Understanding Loans Against Property for NRIs

A loan against property for NRI or LAP is a secured loan where NRIs can borrow money by mortgaging a commercial or residential property. This loan is important for meeting any financial need, such as funding higher education for their children, managing healthcare expenses, or investing in business ventures. This loan offers low interest rates compared to other unsecured loans. This loan is also known for its flexible repayment options. The key features of LAP are as follows:

1. These loans have more extended repayment options, which reduces the repayment burden.
2. These loans require minimal documentation, and the application process is simple.
3. NRIs can obtain higher loan amounts based on the asset's market value through these loans.
4. NRIs can mortgage their assets to access funds without selling them.

Differences Between NRI LAP and Other Types of Loans

1. Personal loans do not require collateral, whereas NRI LAP involves collateral, which reduces the risk of the lender, resulting in better loan terms.
2. The loan amount obtained through NRI LAP is higher than that of a personal loan.
3. Interest rates of NRI LAP are lower than those of any other unsecured loan.
4. LAPs offer longer repayment tenures, whereas personal loans offer shorter tenures.
   

Axis Bank NRI Loan Against Property

The interest rate of a loan against property for NRIs in Axis Bank ranges from 10.50% to 10.95% p.a. It is eligible for salaried employees working in a reputed organisation or any government sector, and the candidate must be older than 24 years at the commencement of the loan. The features of Axis Bank  NRI LAP are as follows:

1. It offers attractive interest rates.
2. The loan can be applied online.
3. The tenure of the loan repayment is flexible.
4. The application process is easy and quick.
5. Discounting the lease rental is available. 
6. There is a doorstep service.

Documents Required

The documents required for claiming the loan are as follows:

• Identity Proof.
• Address Proof.
• Birth Date Proof.
• Proof of Signature
• Income Proof.
• Documents of the property.

ICICI Bank NRI Loan Against Property

The interest rate of ICICI Bank NRI Loan Against Property starts from 10.70% onwards. It is eligible for both salaried individuals and self-employed individuals. The key features are as follows:

1. The repayment tenure is flexible (up to 15 years).
2. The interest rates are attractive.
3. Doctors have special offers.
4. Immediate provisional approval

Documents Required

1. Salaried Individuals-

• Documents of the property
• Proof of income, including salary slips for the past 2 months, the most recent Form 16, and a bank statement for the last three months
• Completed and signed application form
• Proof of identity and address (KYC), such as Aadhaar, PAN card, Voter ID card, NREGA job card, etc.

2. Self-Employed Professionals-

• Proof of income, including the most recent two income tax returns, profit and loss accounts and balance sheets for the past two years (with schedules), along with a six-month statement of bank.
• Documents of the property
• Completed and signed application form
• Identity and address verification (KYC), including PAN card, Voter ID card, Aadhaar, etc.

3. Self-Employed Non-Individuals-

• Proof of income, including the most recent two income tax returns, profit and loss accounts and balance sheets for the past two years (with schedules), along with a six-month statement of bank.
• Documents of the property
• Completed and signed application form
• Identity proof (KYC), like PAN card, GST registration copy, AOA, MOA of the company.

SBI NRI Loan Against Property

The SBI NRI Loan Against Property Interest rate varies depending on the loan amount. This loan is given to employees, professionals and the self-employed like the IT professionals and NRI. The loan should be settled before the borrower turns 70. The borrower should have a minimum income of Rs 25,000 per month. The features of the SBI NRI loan against property are:

• The entire operation is completely transparent.
• The loan can be accessed from any branch.
• The processing charges are low.
• Personal loans are available for individual owners of residential homes, flats, and select commercial properties.
• Interest rates are calculated using the daily reducing balance method.
• Rental income is also considered for loan eligibility in certain cases.

Federal Bank NRI Loan Against Property

The interest rate of Federal Bank NRI Loan Against Property varies from 11.15 % to 14.65%. It has many features. They are:

• Quick processing of the loan.
• The period of the repayment is up to 15 years.
• The rate of interest and EMI is low.
• The paperwork is minimal.
• The amount of loan can be up to ₹5 Cr.
• The loan can be secured using a plot of land, residential premises or commercial properties.
• The loan can be chosen as an overdraft or a term loan.
• A Surrogate Scheme is available for the self-employed category.
• Balance Transfer Programs are available with options for additional financing.

Documents Required

• KYC Documents
• A verified copy of the Passport, Visa, Work Permit, or ID card is necessary.
• Documents of the property.

Salaried Individuals:

• An NRE account statement from any bank for the past year is required.
• Embassy/CRO certified Certificate of salary or the most recent three months' Salary Slip.

Or,

• Two-year statement of the customer’s NRE account or/and accounts of the resident’s spouse or parents with any bank where remittance has been made.

Non-Salaried Individuals:

• Evidence of the existence of the business and profile the of business.
• Statement of the bank account for the last 1 year.
•  Balance Sheet and Account of Profit & Loss for the last two years. If available, include any tax-paid challan.

Or,

• Two-year statement of the customer’s NRE account and/or accounts of the resident’s spouse or parents with any bank where remittance has been made.

Key Considerations for NRI Loan Against Property

When considering a Loan Against Property (LAP) as a Non-Resident Indian (NRI), it's important to take several factors into account so that you make a good decision. The key considerations are:

Eligibility Criteria

The first step to understand is the eligibility criteria. The NRI should be between  21 and 60 years of age and have a stable source of income. Some banks may also have specific requirements regarding the country of residence and type of employment. The NRI should meet all these criteria before applying for the loan

Loan Amount and LTV Ratio

The Loan-to-Value (LTV) ratio determines the amount that can be borrowed against the value of the property. This ranges from 50% to 75% of the property’s market value for NRIs. It is always important to get the property evaluated correctly and get a clear understanding of the amount that can be borrowed.

Interest Rates

Interest rates for NRI LAPs can vary between fixed and floating rates. Fixed rates remain constant throughout the tenure of the loan, providing stability in repayments while floating rates can change based on market conditions. Comparing the rates with different lenders will help make the best financial decisions.

Repayment Tenure

LAPs offer flexible repayment tenures, often ranging from 5 to 15 years, with some lenders offering even up to 20 years. When choosing the tenure, one should always consider the financial capacity and long-term plans. Longer tenures mean lower EMIs but higher interest outgo over time.

Documentation Requirements

NRIs need to submit specific documents, including a copy of their passport, visa, work permit, salary slips, and bank statements. All the necessary documents should be kept in order and certified.  This will streamline the approval process and prevent delays.

Processing Fees and Other Charges

Lenders often charge processing fees, which can range from 0.5% to 2% of the loan amount. There may also be other charges like legal fees, valuation fees, and prepayment penalties. Factor in these costs while calculating the overall expense of taking the loan.

Property Eligibility

All properties are not eligible for a LAP. The properties that are intended to be mortgaged have to be free from legal disputes and have clear titles. Properties that are well-maintained and located in prime areas are usually preferred by lenders.

Tax Implications

Interest paid on LAPs can be eligible for tax deductions under certain conditions. As an NRI, it's essential to understand the tax implications in both the country of residence and India. It is always advisable to consult a tax advisor, who can provide clarity and will help to make the most of available tax benefits.

Exchange Rate Fluctuations

An NRI’s income is usually in foreign currency. The exchange rate fluctuations can impact the amount of repayment when converted to INR. Considering the risk and exploring the hedging options if available will help to safeguard against adverse currency movements

Lender Reputation

A lender with a good reputation and robust customer service will always provide better support and smoother processing.

Simplifying NRI Loan Against Property with NoBroker

Unlocking the potential of your property as an NRI through a Loan Against Property (LAP) can offer several compelling benefits. It offers financial flexibility, tax advantages, extended repayment tenure and a lower rate of interest. NoBroker simplifies this process, making it accessible and efficient for NRIs looking to leverage their property assets. Empower your financial decisions with NoBroker’s commitment to transparency, efficiency, and customer satisfaction. Whether you're looking to fund a business venture, consolidate debts, or finance other investments, NoBroker ensures a smooth journey towards securing your NRI LAP. Contact NoBroker now to learn more and start your NRI LAP journey.

Frequently Asked Questions

Q: Can I apply for an NRI LAP online?

A: Yes, many lenders, including NoBroker, offer convenient online application processes for NRI LAPs.

Q: How can NRIs use the funds from a Loan Against Property?

A: NRIs can use the funds from LAP for business expansion, education expenses, home renovation, debt consolidation, and other personal or investment purposes

Q: Can NRIs apply for a Loan Against Property for properties located anywhere in India?

A: Yes, NRIs can apply for LAP against residential or commercial properties located in India, subject to the property meeting the lender's eligibility criteria.

Q: Are there any restrictions on how NRIs can use the funds obtained through a Loan Against Property?

A: Funds from LAP can be used for both personal and business purposes, including but not limited to home renovation, education expenses, debt consolidation, and investment opportunities.

Q: What are the implications of fluctuating exchange rates on NRI LAP repayments?

A: Fluctuating exchange rates can impact the EMI amount payable in INR, potentially affecting the borrower's budget. It's advisable to consider hedging options to mitigate this risk.