Neil works as an investment banker in the US. Growing up in Mumbai, he dreamed of owning his own apartment in the city. Now that he's capable of making his dream come true, Neil wants to buy property in Mumbai. After a thorough browsing from 2BHK flats in Panvel to township projects in Mumbai, Neil managed to narrow down on an apartment, but he had a difficult time sorting out the paperwork and gathering documents for his home loan application.
Just like Neil, most NRIs looking to buy property in India experience the biggest hurdle in navigating finances. In order to make your dream investment easy, we at Hiranandani Communities have made a handy home financing guide about all the basic elements you'll need as non-resident Indian (NRI) to buy property in India.
1. Bank Account: The most basic item you will need is a bank account. Your bank account will facilitate all your financial transactions and loan applications. As an NRI, you will need to have one of the following types of bank accounts:
- NRE: NRE or non-resident rupee account is dominated by the Indian rupee. One can deposit foreign currency and it gets converted to Indian rupees automatically. An NRE account can be a savings account, current account or a fixed deposit. Transferring money from India is free of transaction fees and NRE accounts even provide a higher interest rate than other accounts. You can remit your foreign as well as Indian earnings in an NRE account. This account can be used to transact and transfer money during a property purchase.
- NRO: Unlike an NRE account, a NRO or non-resident ordinary account is a current or savings account exclusively for earnings in India. Rent, dividends, deposits earned in India can be deposited in an NRO account and it will automatically be converted into foreign currency. However, for reparation of your earnings in a foreign land, there are fees by NRO accounts. This account can be used for buying property in India.
2. Once you've got an NRE or NRO account, the most important documents you'll need to apply for a loan are:
- A valid passport with persons of Indian origin (PIO) card or Overseas Citizen of India card
- Address proof
- Permanent Account Number (PAN) card
- Passport size photographs
3. POA: Given NRIs reside outside the country; they will need to name a friend or relative living in India as power of attorney (POA). One can even specify the types of rights a POA will have over the property.
4. Nature of property: NRIs cannot purchase agricultural land, plantation land or farmland. They can, however, inherit agricultural land.
5. Home Loan: RBI has permitted banks to grant loans to NRIs for buying residential properties in India. According to the rules, NRIs who avail loans will need to repay them in rupees. The loan amount cannot be credited in NRI's foreign account but will be disbursed in the builder or developer's bank account. The loan amount can be paid using an NRO or NRE account.
Use this guide to get the basics right when it comes to buying property and making an investment in Indian real estate.