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Buying a house is a huge financial decision, and raising initial funds to achieve it requires a lot of planning and thought. Ideally, the down payment to buy a house should be 15-20% of the purchase value of the property. This percentage can vary depending on the price of the house. Hence, you should save enough before actually deciding to buy a house. Which is why arranging your home loan down payment is a long-term goal and needs a very disciplined mindset.
Let’s discuss some of the ways in which you can raise the down payment for your dream home.
Start saving early
Possibly, the most fuss-free way to achieve your down payment goal is to start saving more, as early as possible. Invest in high-return instruments like equity and pass on the gains to safer financial instruments like recurring deposits, fixed deposits, etc. Make a monthly budget and eliminate unnecessary purchases from the very beginning to put yourself on the path of financial intelligence.
Loan from Employees Provident Fund
If you have had a PF account for more than 5 years, you can consider taking a loan from the same to raise the down payment for your home loan.
Liquidate a few investments
You can liquidate or mortgage a few assets and investments like your mutual funds, shares, old four-wheeler, jewellery, life insurance policies, etc. Loans are offered by most banks against DEMAT shares, RBI Relief Bonds, UTI bonds, NSC and KVP, among others. Loans against securities provide you instant liquidity without any need to sell your securities.
Unsecured Loans
Avail an unsecured loan or a personal loan where the interest rates would be high. But they wouldn’t require any collateral, plus will be approved instantly, provided you have a high credit score and meet other eligibility criteria.
Loan from employer
You can arrange the down payment for your house from your employer too. Many employers offer their employees such loans at low interest rates. How about using this as an easy option?
‘Proportionate Release’ facility
Through this option, you can make the down payment in small instalments instead of an upfront lump sum payment. As construction takes years, you could utilise periodic down payments in the interim period, based on which the lender would release your loan disbursements. This frees you of making a huge lump sum down payment at one go!
‘Pradhan Mantri Awas Yojana’ scheme
The Pradhan Mantri Awas Yojana (PMAY) offers interest subsidies of up to 6.5% depending upon your income and other eligibility criteria. This will cut down the payable EMI, and then you’ll be able to use the existing funds for the down-payment of your home loan. Helpful, right?
Borrow from friends or relatives
Lastly, if nothing works out, you can borrow funds from your parents, relatives or friends who have spare funds. It comes without any interest, but still will require proper planning for you to be able to repay it.
Final word
Buying your dream home is difficult, but not impossible at all given you plan it beforehand and be very thoughtful of your expenses. Plan well for a better future today!
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