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We make innumerable purchases but few are as dear as buying a home. The excitement and nervousness of having a door with your name on it is comforting and gives you the opportunity of spreading your roots, both literally and figuratively. Real estate is a great investment tool that also allows you to reap lucrative returns over time. While the opportunities that come with buying a home are numerous, let us address the funding aspect. Home Loans are fortunately offered today by most of the lenders, but the down payment is an important aspect.
Down payment, for those who are not aware, is when you have to personally finance a percentage of the cost of purchase. This percentage could be 20% of the total cost with the remainder being fulfilled by the Home Loan lender. A higher home loan down payment brings down your repayment obligation. However, it is not easy to procure funds for down payment, especially because one has to prepare for several other expenses that come with buying a house. But fret not!
Here are some effective strategies that you can use to cover your Home Loan down payment:
An unsecured loan is the most viable way of raising funds for a down payment. Approach the lender and apply for a Personal Loan if you meet the eligibility criteria. The collateral-free loan is offered at a nominal interest rate, especially when you have a good credit history. Avail a Personal Loan from Finserv MARKETS to enjoy the best non-collateral loan deals.
Investments are a great source of funding your Home Loan down payment. A good investment portfolio or a number of fixed deposits (FDs) can be your saving grace in such times. Liquidate your shares or savings to raise the funds. You can also pledge your FDs, Mutual Funds, and Life Insurance certificates as security to avail low interest, collateral-backed loans. Pledging your securities is a good way to generate the much-needed funds while ensuring that your investments continue to reap profits. Use your investment funds wisely depending upon your profile.
The Pradhan Mantri Awas Yojana (PMAY) is a government scheme that encourages home buyers in the country. It aims to provide beneficiaries with affordable housing with an interest rate subsidy of 6.5% on Home Loans. If you meet the eligibility criteria, you can avail the scheme to mitigate the financial pressure when making the loan repayments and divert the additional funds at hand to serve your down payment funds. Check with your lender and evaluate the terms for availing the scheme.
This could be the last resort on your list of ways to raise funds. While it may seem like a tough way, it is not such a bad option. The biggest advantage of getting financial aid from your friends and family is that you do not have to pay interest on repayment in most cases. Additionally, you do not have to incur heavy penalty fees if you make late payments. So, if this works for you, this is a great way to raise the required funds.
A large number of companies offer loans to employees to serve different purposes, including the purchase of a home. However, your eligibility depends on several factors including your relationship with the employer, your tenure in the company, your salary bracket, and much more. If you do qualify after checking all these factors, you can avail this loan through minimal documentation and value-added offers.
While the above-stated factors are a great way to raise funds for your Home Loan down payment, do note some of these aspects before you make the choice:
Taking on another unsecured or secured loan can be financially stressful. So ensure that you evaluate your obligations and repayment capacity well in advance before you make the choice.
Serving your finances through a loan from friends and family is great; however, it can sometimes lead to strained relationships if the repayment is not fulfilled in time.
A loan from the company can bind you with several long-term obligations. Thus, always make sure that you read the underlying fine print before you borrow the funds from your employer.
Failing to make repayments on your secured loans can put your assets at risk. Only apply for such a loan when you are confident about your financial standing.
Raising funds is the primary aspect of financing your dream purchase. Once you gather the adequate Home Loan down payment funds, it is time to find the right lender who will offer you the best terms on a Home Loan. At Finserv MARKETS, you can avail the most lucrative Home Loans with a sanction of up to ₹5 crore at nominal interest rates. We will curate a personalised experience that enables you to enjoy the comfort of purchasing your dream home without any hassles. Use the Home Loan calculator to find the amount you would have to pay as EMIs.