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Ask Mint | NRI main applicant in joint home loan

Ask Mint | NRI main applicant in joint home loan
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First Published: Mon, Apr 05 2010. 09 02 PM IST

Updated: Mon, Apr 05 2010. 09 02 PM IST
What is a home loan on floating rate?
—Sudhansu Muduli
A floating rate loan is a product where the interest rate is linked to a prime lending rate (PLR) of the institution. Changes in the economy, depending on various macroeconomic parameters, tend to affect the cost of funds of the lending organization. This, in turn, may affect the PLR and, hence, the interest rate. After a change in PLR, some lenders reset the rate once in every three months, while some others reset it on the first day of every calendar quarter.
I took a home loan for Rs20 lakh for an under-construction property. It will take around 5-6 months for the construction to be completed. So far, my loan amount has been disbursed in instalments as per the level of completion of the construction. I read about the tranche-based equated monthly instalment (EMI) option on the Internet, but somebody told me that this option is only applicable for flats having a construction period of more than two years. Is that true?
—Gokulbabu K.G.
Tranched EMIs (principal + interest) can be started once a loan is partly disbursed. The EMI is payable on the disbursed amount. The customer benefits by way of starting principal repayment even before the property is ready for possession and, hence, repays the loan faster. Based on your question, we are assuming that you have taken the loan for construction on a plot of land. A construction period of over two years is not mandatory. However, generally customers choose tranched EMI when the construction period is longer to be able to repay a substantial amount of principal against a normal situation where you start your EMIs on completion.
I am a resident Indian, but my son is a non-resident Indian (NRI). Can we jointly buy a flat? Can I contribute in its purchase and also apply for a loan jointly?
—Sanjiwani Sao
Yes, both of you can jointly apply for a home loan. However, it would be considered an NRI loan. Thus, even if the asset is jointly owned, it is your son who will be considered as the principal applicant and his income will be primarily considered for loan eligibility owing to his age, the years left of his service, etc. The EMI payments will also have to be made by him, which he could do either through his non-resident external account or by opening a non-resident (ordinary) account jointly with you, and then issuing cheques or standing instructions from the account. However, this is subject to several conditions. We, therefore, recommend you to personally visit the office of a lending institution for a detailed discussion.
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First Published: Mon, Apr 05 2010. 09 02 PM IST
More Topics: Ask Mint | Renu Sud | NRI | Home Loan | EMI |