Buying a house is an important decision and so it requires planning behind it. In the current real estate scenario, where rents are high, it makes sense to take a home loan and pay the EMIs instead of the rent. The property prices are extremely high in cities as well as small towns, thereby making it difficult for mid and lower income groups to buy them. This is where banks and other financial institutions have stepped in with home loans. With home loans, 80% of the property price is financed by the bank while the individual is expected to pay the 20% as down-payment.
Those who are looking for a home loan often find it difficult to arrange for the down payment as well. The inflation prevalent in the economy does not favor savings and setting apart an amount to be used as down payment for a property is a time consuming and an incredibly difficult process. A quick personal loan to make these payments can be considered.
Down payment is defined as the amount paid upfront to the seller and it also acts as a security for the financial institution. Financial institution considers the fact that a substantial amount of your personal fund is invested in the property and so the customer is inclined to repay the home loan taken.
Things to know about home loan down payment
Down payment amount and limit: There is no maximum limit for down payments. A minimum of 20 % is demanded by banks and other financial institutions. The higher the down payment, lesser the amount one takes as home loan and so a higher amount as down payments is preferred.
Effect of property age: The age of property may prompt the financial institution to offer lesser loan amount. Banks are skeptical about financing a property that is more than 15 years old. In such cases, the amount of down payment can increase.
Registration and other costs are not covered: To register the property in your name a percentage of the property cost is to be paid. In addition, there are other costs like property tax that are not covered by a home loan. These additional costs have to be paid out of the owner’s pocket.
Personal loan for home loan down payment
You can choose to take out a personal loan to make the home loan down payment. It is not the best of situations to avail two loans at the same time. However, in situations where the individual is unable to get money through other sources, a personal loan can be accepted. Being unsecured loan, these have lenient conditions and with fintechs like Qbera, extremely easy to get as well. It is highly recommended to maintain an ideal income to debt ratio in order to qualify for these two loans- personal and home loan. While availing a quick personal loan as down payment for a home loan- take care to keep the interest rate to a minimum possible. Invariably, this is one of the most expensive ways to arrange for the amount and a higher interest rate may wreak havoc to your finances as well as the income to debt ratio.