The Indian home loan industry works according to the system laid down by the Reserve Bank of India (RBI). Every step taken by Indian lenders must be as per the framework designed by the central bank.
One such rule is regarding the downpayment for availing of home loans. So, before looking for how to get home loans, you must know the rules regarding the down payment.
As per RBI guidelines, every home loan borrower must make a minimum downpayment of 10% while availing of a home loan. So, Indian lenders disburse a loan amount of up to 90% of the property market value.
However, although the minimum down payment amount is 10%, some borrowers may need a down payment of 20% to minimise their credit risks.
Whatever the amount, making a down payment is mandatory for a home loan, and there is no way to bypass it. Fortunately, you can access a free home loan interest rate calculator to estimate your liability before applying for a home loan. While you cannot bypass the down payment to avail of a home loan in India, you can certainly take some steps to arrange the down payment amount.
The following sections discuss the top steps intelligent borrowers take to make the downpayment and conveniently fulfil their dream of owning a property.
How to Get Home Loan Down Payment Amount
While a bit of sacrifice cannot be ruled out, you can follow the steps mentioned below to arrange the down payment amount seamlessly:
Apply For a Personal Loan
A personal loan is an unsecured loan for which you do not need to mortgage anything. A personal loan can come in handy when you struggle to arrange the funds for a downpayment.
For instance, if your home loan amount is INR 40 lakh and you have to make a downpayment of INR 4 lakh, you can apply for a personal loan worth INR 4 lakh and use the fund to make the down payment of the home loan.
If your credit score is above 800, you can get attractive interest rates on personal and home loans. So, before taking this route, it is wise to improve your credit score.
Borrow From A Relative or Friend
An excellent way to get the funds needed to make a down payment is by asking your friends or relatives to give you the amount.
Seeking the funds from your closed ones helps you avoid the troubles of applying for loans.
Rely on Your Savings
You may have some funds in your savings or deposit account. You may withdraw those funds before resorting to other means.
Alternatively, if you have a stock market or mutual fund account, you may also liquidate your investment to get the money needed to make a down payment. Some financial institutions provide a loan against a fixed deposit facility. So, if you have fixed deposits, you may pledge them to get the funds for the down payment.
Also, since a loan against FD is a secured loan, the interest rate is much lower than unsecured personal loans.
Ask Your Employer to Give You a Loan
If you are a salaried employee and your company provides loans for employees, you can request them to disburse a loan. Availing of employer-provided loans is easy because you do not need to submit many documents.
However, some employers evaluate the employee’s reputation and service tenure before disbursing the loan amount or determining the interest rate.
Negotiate With Your Lender
Lenders often provide discounted interest rates on home loans to people with a decent credit score. So, if your credit score is good, you may convince the lender to reduce the interest rate.
After your lender informs you of the loan amount, use a home loan interest rate calculator to check the real cost of the loan.
The down payment assures the lender that a borrower is serious with a home loan since their stakes are involved. It also reduces the EMI since you already pay 10%. Some borrowers increase the down payment amount further since it reduces the EMI substantially.
So, it is crucial to keep the above-mentioned points regarding down payment in mind before looking for how to get a home loan in India.