Home is where one goes at the end of the day, to rest. It is a place where a person can do as he pleases without having to worry about what others say or think. Your home is very different from the place you rented. You can design the interior of your house as you like (unless you seek permission from the homeowner as in a rented area).
CHALLENGES TO PAY DOWN PAYMENTS
For an HDFC Home Loan, you need to pay off a portion of your home expenses (calculated as eligible, a minimum of 10%) and then the lender (bank or housing finance institution) will cover the rest (amount of the home loan). The part you need to pay from your sources to the cost of the house is called down payment. The down payment is essential to qualifying for a home loan.
TIPS FOR PAYING DOWN PAYMENT
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BUILD A CORPUS
An easy way to save your down payment is to build a corporation from your savings. By starting to save at a young age, from the beginning of your career, you can rely on the power of integration to raise the money that you have wrapped in ice and become a purposeful corporation. In the early years, you could consider investing your savings in high-yield investments such as equity (with the same risk levels). After that, you need a profitable booking and transfer money to a safe investment like bank deposits. Make a budget, look at how you spend your money each month and make a concerted effort to reduce your running costs and unnecessary expenses. The amount by which the expenditure needs to be reduced can be calculated by a home loan EMI calculator. Also, pay off your debt by paying off the most expensive loans, which will gradually increase your savings.
- CONSIDER THE CHOICE OF ‘ RATION RELEASE'
This is a centre offered by selective lenders to clients, for new construction projects promoted by selected engineers. This option allows you to pay less in instalments over time than one large amount. As construction takes years, you can make your payment periodically depending on whether the lender will repay your loan payments.
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CHOOSING A CREDIT ACCORDING TO YOUR LIFE INSURANCE POLICY OR EMPLOYMENT FUND
Since the home is a long-term asset you value over time, you might consider opening up your long-term savings if you have no other option. Lending a loan that conflicts with your life insurance policy or provident fund may be considered. You can repay the loan later with your savings.
- GET THE HELP OF FAMILY AND FRIENDS
As a last resort, you might consider borrowing from your friends or relatives. This can be a sensitive issue and you are the best judge in terms of its advice and application.
BIG OR SMALL: HOW MUCH SHOULD BE YOUR DOWN PAYMENT
Although lenders specify the minimum amount of your down payment, you can choose to stick with less or pay more if you can afford it. Each has its advantages and disadvantages.
MERITS OF MAKING A BIG DOWN PAYMENT
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You are the owner of the larger amount in the area and thus reduce your dependence on loans.
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A low loan rate can bring you a low-interest rate as prices vary generally on different loan slabs. For example, a loan of Rs.20 lakh may attract a lower interest rate than a loan of Rs.30 lakh. This depends on the lender's policies.
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A low loan rate offers great comfort to the lending institution and thus improves the chances of getting quick loan approval.
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This leads to cost savings as the processing and home loan costs depend on the amount of the loan.
DEMERITS OF MAKING A BIG DOWN PAYMENT
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Your finances are closed for a long time which leads to a reduction in your income. This can lead to financial instability in an emergency.
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Your mortgage loan brings you tax benefits for both the principal and interest. Low loans mean lower tax returns.
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You may be missing out on start-up costs such as furniture and consumer stability, repairs and renovations, etc. Making your home a home.
