Step-by-Step Guide to Making Your Home Loan Down Payment Effortlessly

When you buy a home, you do not just invest money; you realize a dream. You will need to take out a home loan to afford your purchase. Many banks and NBFCs offer high-value home loans at affordable rates. A home loan usually runs into lakhs and crores. Thus, there are strict rules that banks and NBFCs must follow when issuing housing loans.

One of the key factors concerning a home loan is the down payment. When you apply for a home loan, the lender will only provide a specific amount. You will have to pay the rest upfront, i.e., a down payment. Read on to learn about the best ways to make a down payment for your home loan.

What is a Down Payment?

Most lenders have an upper limit when they issue a home loan. They will give you between 60% and 90% of the amount as a home loan. You will have to pay the remaining balance from your funds. As this amount can go into lakhs or crores, you need to plan your down payments in advance.

You can pay the down payment all at once or over time. If you have made any payment to the seller before, it will be considered a down payment. But you must keep the receipts ready with you and submit them to your home loan provider. Else, you can deposit the money with the lender, who will then pay the entire amount to the seller.

Tips for Making a Down Payment on Your Home

If you are going to buy a house, be ready to make the down payment on your home loan. Here are some vital tips to help you make the down payment easily:

• Plan Early: If you want to buy a home, it can never be a sudden decision. You must plan for years to be able to pay for the deal. If you know you will buy a home after “x” number of years, you can start saving some money every month. The amount can be invested in a risk-free investment. This way, over a period of time, you will be able to accumulate some money that can be used to make the down payment for your home loan.  
• Pay as Much as Possible: Do not take a high-value home loan just because you can. Borrow only what you need. This will help lower the amount of home loan that you require, thus ensuring that your EMIs are lower. You will also be in a better position to repay the EMIs on time. 
• Create a Corpus: You need to create a corpus to be able to make the down payment. There are many ways to create a corpus for a home loan down payment. This includes investment in shares, mutual funds, fixed deposits, or savings schemes. However, you should take precaution before investing. The scheme should have enough liquidity to allow you to withdraw the money when you need it. 
• Proportionate Release: Many lenders offer this option to home loan customers. Herein, you need not make the down payment in one go. The lender will send the money to the seller based on the percentage of the work done. Hence, you will also need to pay the down payment in that proportion only. Only select lenders offer such a facility. Thus, check with your lender before you opt for a home loan. 
• Maintain Records: If you are buying a house from a private seller, you might need to pay some money at the time of the deal and in the interim. This money will count as a down payment. Make sure you send the amount only through a bank account, cheque, or a demand draft. This will help maintain a record and count towards your down payment. You must also get a receipt from the seller every time you make a payment. 
• Liquidate Investments: Borrowing a home loan when you have enough savings is pointless. There is a reason why you save money, which can be used to buy a house. If you cannot make down payments from your current cash flow, you can opt to liquidate your investments. Alternatively, many lenders offer low-interest personal loans secured by securities such as FDs and gold. 
• Personal Loan: When you buy a house, there are many costs involved. You can apply for a personal loan if you do not want to use your savings for the same purpose. This amount will help you take care of the expenses that come with the down payment on a home loan. 

Final Takeaway

Be it a home loan or any other loan, you need to plan your down payments in advance. It would be best if you also looked for a lender that offers the maximum home loan at affordable interest rates.

To read more about home loans and other finance-related topics, check out the Piramal Finance website. They have many blogs and articles on finance and home loans. You can also look at the various home loan options available and determine which one suits you best.