The Indian real estate market has consistently delivered strong returns, making it an attractive investment option. NRIs invest not only to stay connected to their roots but also because the Indian real estate market offers a safe and profitable opportunity for NRI investors to grow their money. Additionally, the rentals are also quite lucrative. However, NRIs planning to secure housing finance either to ensure proper due diligence or benefit from the home loan tax benefits in India must read about various aspects of NRI home loans, especially NRI home loan interest rates. This guide discusses NRI home loan interest rates and shares tips on what NRIs can do to secure the best home loan terms. So, read on.
NRI Home Loan Interest Rates: Everything You Need to Know
NRIs can apply for housing finance to buy under-construction as well as ready-to-move-in properties. Lenders charge interest on the original loan amount and NRI home loan interest rates vary depending on several different external factors. Securing low NRI home loan interest rates is crucial to ensure affordable EMIs and repay the loan easily. Let us look at the factors that affect NRI home loan interest rates. This will help you navigate the home loan process comfortably and secure the most profitable terms.
1. Credit Score: An individual’s credit score is important as it indicates their repayment capacity and creditworthiness. A high credit score between 750 and 900 is desirable, as it indicates a low risk of loan default and enables borrowers to secure lower home loan interest rates. Maintaining a high credit score is easy if you are not excessively dependent on credit, use credit judiciously, have a mix of both secured and unsecured loans, and have maintained your credit history. Maintaining a clean repayment history without any loan defaults helps borrowers build a high credit score, allowing them to secure loans on the most favourable terms. If you are planning to apply for a home loan on WhatsApp or through any other means, you must check your credit score beforehand and advance with your home loan application only if your credit rating is at least 750.
2. LTV Ratio: The LTV ratio is the ratio of the loan amount that one has availed of in comparison to the total value of the property. A high loan amount leads to home loans becoming high LTV ratio loans. High LTV ratio loans incur high loan EMIs and therefore, the chances of a loan default are also high in the case of these loans. To make up for the high risk, lenders charge high home loan interest rates on high LTV ratio loans. Home loan borrowers must opt for a low LTV ratio loan and pay a higher down payment if they want to secure a low home loan interest. This will not only enable them to negotiate better home loan terms but also keep the home loan EMIs affordable and repay the loan comfortably.
3. Maintain Stable Employment and Income: If you want to establish candidature for low home loan interest rates and pay the loan through affordable home loan EMIs, you must maintain a stable job and income. Whether you are an NRI or an Indian citizen, having a stable job and income benefits everyone equally. Individuals with consistent employment and income tend to pay their loan EMIs on time, making them low-risk borrowers in the eyes of financial institutions, which often leads to financial institutions sanctioning their home loans at low NRI home loan interest rates.
4. Loan Tenor and Quality of the Pledged Collateral: The home loan tenor you choose to go for will also impact the home loan interest rates you get. Long-tenor loans generally attract lower home loan interest rates than short-tenor loans. Additionally, the quality of the pledged collateral is important too. High-value properties with high resale value attract lower home loan interest rates than low-value properties.
Final Words
The Indian real estate market has proven to be a lucrative investment option, especially for NRIs, who want to remain connected with their roots while also benefiting from strong financial returns. NRIs looking to secure housing finance must understand various aspects of home loans, including interest rates, to make informed decisions. They must also develop familiarity with the home loan process to enjoy a smooth application and negotiation process.
