6 Steps to Save Money on your Home Loan Down PaymentMortgage Rate Lenders & Home Loan BanksUpdated on Apr 6, 2016 View more like this | Visit INDIAHOMA, OK | Contact Arwind Sharma |
Don’t let financial deficiencies come between you and your dream home. While applying for a home loan would definitely be the right choice, the enormous amount involved in down payment could make you second guess yourself.
What is Down Payment?
Down payment refers to an amount that you pay to a lender when applying for a loan. In India, down payments are usually 15-20% of the entire loan that you borrow. So, if you want to opt for a home loan of Rs.50 lakh, the down payment would be approximately Rs.7.5 lakh - Rs.10 lakh.
This is not a small amount for most people applying for the loan, and organizing your savings and funds accordingly can be stressful.
The immense challenge of down payment that holds you back can easily be tackled with these simple measures.
Planning
This is the first and foremost step you need to be take when applying for a home loan. Every little detail has to be considered, like the household income, the cost of your dream home, the home loan interest rates, monthly expenditure, and any factors that you think will influence the loan. Chalking out a detailed plan can come in handy when repaying the loan.
Home Loan EMI Calculator
A home loan EMI calculator is the simplest and most efficient online tool available to help you analyse the specifics of your home loan.
All you have to do is fill in details like the loan amount, the tenure, the rate of interest, and the processing fee, if any, and it gives you a picture of your expenses and will help you plan your budget accordingly for that period.
Bridge Loan
A few of us inherit property that we usually end up selling for various reasons and the process of selling can be time-consuming.
So apply for a bridge loan before a deal is made on your property. It’s a short-term loan that lasts less than a year, and bears comparatively higher interest rates. When you find a buyer for your property, you can repay the loan, and if you don’t find a buyer, you can convert it to a mortgage loan. You can use these funds to pay off the down payment. Since it is a short-term loan, this would be an ideal option for the down payment without drastically disturbing your financial stability.
Automatic Bank Transfers
To ensure your monthly expenses don’t cut into your savings, open a bank account specifically to hold the down payment. Enable an automatic transfer of a specific amount from your salary to this account, and make sure you don’t touch it!
Borrowing Against Life Insurance
An accepted method these days, borrowing against a life insurance policy is another way to fund your down payment. This allows for lower rates of interest and an easy repayment schedule.
Spending Wisely
This is probably the most fundamental move when saving for the down payment. Cut back on your expenses and be extremely selective about what you purchase. You can afford to do away with certain luxuries until you’re financially stable again.
These are just some of the initiatives that you could choose from to save for the humongous down payment without blowing a hole in your savings.
What is Down Payment?
Down payment refers to an amount that you pay to a lender when applying for a loan. In India, down payments are usually 15-20% of the entire loan that you borrow. So, if you want to opt for a home loan of Rs.50 lakh, the down payment would be approximately Rs.7.5 lakh - Rs.10 lakh.
This is not a small amount for most people applying for the loan, and organizing your savings and funds accordingly can be stressful.
The immense challenge of down payment that holds you back can easily be tackled with these simple measures.
Planning
This is the first and foremost step you need to be take when applying for a home loan. Every little detail has to be considered, like the household income, the cost of your dream home, the home loan interest rates, monthly expenditure, and any factors that you think will influence the loan. Chalking out a detailed plan can come in handy when repaying the loan.
Home Loan EMI Calculator
A home loan EMI calculator is the simplest and most efficient online tool available to help you analyse the specifics of your home loan.
All you have to do is fill in details like the loan amount, the tenure, the rate of interest, and the processing fee, if any, and it gives you a picture of your expenses and will help you plan your budget accordingly for that period.
Bridge Loan
A few of us inherit property that we usually end up selling for various reasons and the process of selling can be time-consuming.
So apply for a bridge loan before a deal is made on your property. It’s a short-term loan that lasts less than a year, and bears comparatively higher interest rates. When you find a buyer for your property, you can repay the loan, and if you don’t find a buyer, you can convert it to a mortgage loan. You can use these funds to pay off the down payment. Since it is a short-term loan, this would be an ideal option for the down payment without drastically disturbing your financial stability.
Automatic Bank Transfers
To ensure your monthly expenses don’t cut into your savings, open a bank account specifically to hold the down payment. Enable an automatic transfer of a specific amount from your salary to this account, and make sure you don’t touch it!
Borrowing Against Life Insurance
An accepted method these days, borrowing against a life insurance policy is another way to fund your down payment. This allows for lower rates of interest and an easy repayment schedule.
Spending Wisely
This is probably the most fundamental move when saving for the down payment. Cut back on your expenses and be extremely selective about what you purchase. You can afford to do away with certain luxuries until you’re financially stable again.
These are just some of the initiatives that you could choose from to save for the humongous down payment without blowing a hole in your savings.
