The market prices for properties are currently very expensive. Affording a home without any financial support can be challenging. This is the reason why most people take home loans to get the required funds to buy houses. Now, before you apply for home loan, it is important to know that this loan is not going to cover the entire expenses of a property purchase. Lenders offer home loans that generally cover 90% of the property cost for houses that cost under Rs 75 lakh and 80% for houses that cost over Rs 75 lakh.
Now, if you are going for a property that is costing Rs 90 lakh, the home loan can cover Rs 72 lakh. This means that Rs 18 lakh would have to be paid from your personal savings. This amount is known as the down payment. Now, putting a higher down payment reduces the EMI amount, thereby making repayment easier. However, it is possible that you will find it difficult to pay a high down payment.
If this is the case, here are a few effective ways in which you can lower the down payment while taking a home loan:
- Make sure to have a low debt obligation
Any lender will check the existing loans of the applicant. This is to understand whether the applicant will be able to repay the home loan. Having little to no debt obligation is considered ideal for someone who is looking to get a home loan.
- Break the down payment into EMIs
There are some lenders that permit borrowers to clear the down payment over a couple of months instead of paying a lump sum. The loan amount gets released in proportion to the payments you make for the down payment amount. This is known as the proportionate release option.
- Negotiate with the lender
The fact that there are numerous lenders out there works in favour of the borrower. While some might require you to make a 20% down payment for the property purchase, there will be others that only require a 10% down payment. This means that you can negotiate the down payment terms and find a suitable option. Not just this, you can also discuss with the lender regarding a suitable home loan interest rate, amount, and tenure. For this, use a home loan EMI calculator, which will help you understand the EMI payments.
- Go for a house that has a high value
While borrowing a housing loan, it is important to make sure that the property that you are buying has a market value that is equal to the loan amount that you are borrowing. When a property is backed up by a reputed builder and is in a good location, its value will be able to cover the loan. This gives the lender confidence, ultimately allowing you to pay a lower down payment.
Now that you have learnt about the ways to lower the down payment, go ahead and speak to a lender regarding the loan. Also, make sure to check the lender’s home loan eligibility criteria to be aware of the loan amount that can be expected.