Yes, NRIs, like all other Indian nationals, can obtain a loan against property that they have in India. However, the list of documents they must provide differs slightly from that for regular Indian citizens. As an NRI, you must confirm the paperwork process and minimum eligibility criteria with your preferred lender before submitting your loan application.
If you are an NRI and want to get an easy mortgage loan approval, you should have the following documents ready:
Also Read: Common Queries That Revolve Around Loan Against Property Misconceptions
A credit score is a three-digit number between 300 and 900 that informs lenders about your credit behaviour. Lenders can determine the risk associated with your profile by using this score and reviewing your credit report. If you have a higher credit score, you will easily get approval for an NRI loan against property on favourable terms.
However, if you have a low credit score, you must first improve it by following the tips outlined below.
If you are an NRI entrepreneur with multiple businesses in different countries, you may have used business financing to meet your capital requirements. If you are working abroad as an employee, you may have incurred debt during education or when purchasing some assets.
As such, it becomes crucial for lenders to determine your present debt-to-income (DTI) ratio. If the DTI is below 50, you are unlikely to get a mortgage loan approval. Therefore, if possible, try to reduce your existing debts by foreclosing a few, at least the ones with lower EMIs or those nearing the end of their tenure.
Many borrowers only provide an NRI loan against property to people running their own businesses. If you are a salaried employee, you may have difficulty finding a lender willing to extend you a loan. However, certain criteria apply to business owners as well. If you are an entrepreneur who conducts business with an enemy country of India or involved in a business that the Indian government considers illegal, you will be denied a mortgage loan.
Similarly, if your business only receives orders during a specific season and does not operate during the remaining days of a year, you may not be approved for a loan.
The property condition and location are pivotal to mortgage loan approval. Both these factors play a major role in determining the property's resale value. If your property is in a commercial area or posh area, with facilities such as schools, hospitals, shopping malls, and grocery stores within a three-kilometre radius, you will have no trouble getting your loan approved.
Moving on to the property condition, if you are mortgaging a property that is in poor condition, such as one having leakages from the ceiling, cracks in the walls, or a collapsed portion, your loan application will be rejected during the inspection process.
Many people want to know that "can an NRI get a loan for commercial property?" The straightforward answer to this doubt is "Yes, NRIs can get loans against a commercial property." In fact, commercial property can get you a higher loan to value (LTV) and faster approval. The reason is that if you default, such a property is easier to auction off to recover the outstanding debt. Furthermore, a commercial property allows the loan applicant to earn a high passive income through rentals even if they lose their primary source of income.
Lenders will not accept a mortgage application if the property in question does not have insurance. Insurance protects you financially in the event your property is damaged by fire or natural disasters. Simply put, insurance is required because it aids in property maintenance and protects the lender in case of loan default.
As an NRI, you can submit your mortgage loan application online or offline. We have described the online process below.
Also Read: Mortgage Loan Interest Rate: Everything You Want to Know
As an NRI, you are eligible to apply for a loan against property if you have a stable income and can provide all the necessary documents. Also, make sure you do not have too many debts and that your DTI is less than 50%. If you have a good credit profile, the mortgage lender will not hesitate to sanction the loan at a low loan against property interest rate.