The down payment is an important aspect of your mortgage loan, where you privately repay 5% to 30% of the value of your home and receive the balance from your lender. Many lenders are calling for a 20% home loan down payment balance as your home buying commitment. The more down payment you make, the less is your responsibility to pay back. Test if a down payment reduces the EMIs by using the Home Loan EMI Calculator.
In several cases, you might find it difficult to collect funds for a down payment, provided that you have to plan for many other home loan and acquisition expenses, be they dealer fees, stamp tax, licensing fees, or loan processing fees, as well as ensuring that you have enough money on hand per month to pay EMIs.
The following methods will help you collect money to purchase a house without stressing your finances.
- Look for a soft loan
It's very normal to get support from your families to make a down payment. Do not hesitate to do so until you are confident of your future finances. Apart from your relatives, employers can even grant soft loans to their workers. The main advantage of these loans is that they are soft loans, i.e. they are subject to little or no interest rates, meaning you can end up spending quite a bit of money on the interest accrued on the home loan.
- Choose a PMAY scheme
Pradhan Mantri Awas Yojana was initiated by the government in 2015 to provide affordable housing for the Indian community. PMAY seeks to offer affordable accommodation to everyone by 2022, and if you are a winner of this program, you can receive an interest rate subsidy of up to 6.5 per cent on your housing loan. As this substantially reduces the EMI cost that you have to spend, you do not need to keep extra funds on hand for debt, and you can now use these funds for a home loan down payment. To make use of the award, review the eligibility parameters and other terms of the program.
- Choose an unsecured debt
If you do not have the money to make a home loan payment in advance, there is no better choice but to make use of an unsecured loan. You can conveniently contact the lender to apply for a collateral-free loan at a low-interest rate provided you have a decent credit score and you also follow the other qualifying requirements of the lender. Or you can avail from HDFC Home Loan
- Boost funds from your savings
Investments may be a valuable source of sales and finance. If you have a thriving savings account, you can quickly collect funds to pay off your down payment. Trade any shares to collect funds if the economy is doing well, or merely pledge the FDs, mutual funds, and shares to raise a low-interest loan against stocks. Pledging your shares grants you rights to a high sum sanction on nominal interest, which on the one hand will fund your down payment requirement and, on the other, allow your investment to continue earning.
When you collect funds for the home loan down payment, check for a suitable lender and make use of the loan. For eg, if you opt for a Home Loan, you will earn a high penalty of up to Rs. 3.5 crore on negligible interest. You can also benefit from additional incentives, such as a top-up loan.
- Ask your friends or family for funding
you might consider this to be your last resort, but if you think about it, it's not that bad as an alternative. The great part is that you don't have to pay anything like taxes for the money you borrow. Also, even though you're late in making payments, you don't have to think about any late penalty costs.
- Take a loan from the organization
There are quite a few businesses providing loans to their workers. Of course, this will rely on a variety of considerations, including the relationship with the boss and the tenure held, to name a few. However, such loans require limited paperwork and can quickly be made available.
While there are a few options that can be used when you're planning funds for a down payment, you do need to be careful of such considerations.
