Can You Get a Home Loan in India to Buy a Property in Dubai or London?

If you live in India and want to buy a property in Dubai, London or another overseas market, you cannot simply approach an Indian bank and take a standard home loan against that foreign property.

The reason is straightforward: an Indian lender's home-loan framework is built around property that can be legally assessed, secured and enforced within the relevant Indian regulatory and legal system. Buying property overseas therefore requires a different funding route.

For a resident Indian, the main regulatory channel for sending money abroad for an overseas property purchase is the Reserve Bank of India's Liberalised Remittance Scheme (LRS).

If you are comparing this with the rules that apply when an NRI invests in Indian property, our NRI property investment guide covers the separate FEMA, banking, financing and repatriation framework. 

The Direct Answer

An Indian home loan cannot normally be used as a standard mortgage to finance the purchase of a property outside India.

That does not mean an Indian resident cannot buy property abroad. It means the financing has to be structured differently.

For someone purchasing a property in Dubai or London using money from India, the LRS framework becomes particularly important. The scheme allows eligible resident individuals to remit money overseas for permitted transactions, including the purchase of immovable property abroad.

If the property is being financed through a developer payment plan or another overseas arrangement, the terms need to be checked separately. The fact that a seller or developer offers financing does not automatically mean the arrangement is permitted under Indian foreign-exchange rules.

Regardless of where the property is located, buyers should separately understand the legal and ownership checks involved before committing funds; our property title verification checklist covers the main checks buyers should consider. 

How Can You Fund an Overseas Property Purchase?

The Liberalised Remittance Scheme (LRS) is the main route available to resident individuals who want to remit money from India for permitted overseas transactions.

Under the current framework, a resident individual can remit up to USD 250,000 per financial year, from April to March, for permitted current or capital-account transactions. The purchase of immovable property outside India falls within the permitted capital-account transactions under LRS.

The remittance has to go through an authorised dealer bank. For reporting purposes, the RBI identifies S0005 as the purpose code for the purchase of immovable property.

The USD 250,000 limit is calculated per individual rather than per property. Where family members independently use their LRS limits for a permitted transaction, the rules also allow consolidation in certain circumstances, subject to each person's eligibility and the applicable conditions. RBI specifically notes that family remittances can be consolidated, with additional conditions applying to capital-account transactions such as overseas investments or property-related transactions.

That can make a difference for a family buying a relatively expensive overseas property.

For example, a property does not necessarily have to be paid for in one financial year. Where the purchase agreement involves payments over several years, eligible remittances can potentially be made across different financial years, subject to the LRS limit and the rules applicable at the time of each payment.

The important point is that the remittance needs to comply with FEMA and LRS requirements. A payment schedule offered by a developer does not override those rules.

What About Taking a Mortgage From a Dubai or UK Bank?

This is where the answer becomes less straightforward.

There are different interpretations in market commentary about whether a resident Indian whose income is entirely in India can take a mortgage from an overseas lender to finance an overseas property and then service that borrowing from India.

Because the issue involves FEMA, overseas borrowing rules and the source and manner of repayment, it should not be treated as a simple “yes” or “no” based on a generic property-buying article.

The RBI makes clear that overseas borrowing by residents has to comply with the applicable foreign-exchange borrowing regulations. It also cautions that arrangements designed to bypass or disguise borrowing restrictions can attract consequences under FEMA.

So, if you are considering a Dubai or London mortgage while remaining resident in India, check the exact structure with a chartered accountant, FEMA specialist or qualified cross-border tax adviser before signing the financing agreement.

There is also an important practical distinction.

If you genuinely live and earn in the UK, for example, and qualify for a UK mortgage based on your local income and credit history, that is a different situation from an India-based resident trying to borrow overseas and repay the loan from India.

The lender, source of income, residency status, repayment mechanism and applicable foreign-exchange rules all matter.

Tax Implications You Should Know

Buying property abroad does not make the Indian tax implications disappear.For comparison, our guide to home loan tax benefits in India explains how Section 24(b) and Section 80C work for qualifying Indian home loans and properties. 

Section 24(b) and 80C

The tax benefits commonly associated with an Indian home loan should not automatically be assumed to apply to an overseas property purchase.

In particular, Section 24(b) and Section 80C should not be presented as general deductions for a loan taken to purchase property abroad. The tax treatment depends on the specific transaction, the taxpayer's status and the applicable provisions.

TCS on Overseas Remittances

Tax Collected at Source (TCS) can apply to certain remittances under the LRS framework. The applicable threshold and rate can change, so buyers should check the rules in force when the remittance is actually made rather than relying on an old rate mentioned in a property article.

TCS is also a cash-flow issue. It is not simply an additional property purchase cost in every case, because its treatment in the taxpayer's tax return can depend on the individual's circumstances.

Disclosure of the Foreign Property

This is one area buyers should not overlook.

The Income Tax Department requires applicable residents holding foreign assets to disclose them through the relevant foreign-asset reporting provisions. Foreign immovable property is specifically covered under Schedule FA. The department's current guidance also states that residents with foreign assets or foreign income need to use the appropriate ITR form rather than ITR-1 or ITR-4, where applicable.

The same reporting consideration can extend to income generated from the property.

So if a Dubai apartment is later rented out, or the property is sold and generates a taxable capital gain, the Indian tax treatment needs to be considered alongside any tax obligations in the country where the property is located.