Personal Loan Financing For Down Payment Of Home
Are you planning to buy your dream home but looking for financing sources to make down payment? Know the personal loan financing options here!
Every person wants a house of their own. But most people don’t have enough money to buy one and so take out a home loan to do so. Indeed, a home loan is the best option to own your dream house. Apart from helping purchase a house, they also provide tax benefits on payment of principal as well as interest.The Reserve Bank of India’s norms allow lenders to provide up to 80-90% of the property value as loan, leaving the homebuyers to fund the remaining 10-20% amount themselves. This amount is known as down payment.
With property prices running into lakhs and crores of rupees, the down payment also increases significantly. This down payment requires a deep pool of personal savings and can be a stumbling block in owning own house.In such a scenario, a personal loan is an easy way to meet the funding shortfall.
What Is Personal Loan?This is a loan given to a person for a personal purpose and does not require any collateral. A personal loan is usually provided with minimal documentation. Being an unsecured instrument, a personal loan is offered at a higher rate of interest compared with secured loans such as home and car loans.
A personal loan can be used for just about anything and can be a viable option in a variety of circumstances.
Why Personal Loan For Down Payment?A personal loan offers quick availability of funds with flexible repayment tenures. This way, a home loan borrower can refrain from dipping into savings and emergency funds or look at friends and relatives for some money.
Personal Loan Approval And FeaturesLenders typically look at the credit score, the credit history, and the repaying capacity of the borrower before granting a personal loan. They also look into the financial profile to assess if the borrower has a stable monthly income to pay the equated monthly installments (EMIs) on time.
Lenders provide personal loans without any collateral. And, hence, they charge an interest rate that is higher compared with home loans. But if a person has a good credit profile, the interest rate can still be benign.Borrowers should always check with various lenders for who can give the best interest rate and flexible repayment terms before taking a personal loan. They should also note that if they opt for a personal loan to make the down payment for a home, this affects their repayment capability and will affect the amount of home loan that the bank would be willing to issue.
ConclusionUnlike most secured loans, there are no end-use restrictions on personal loans and it can be used for any transactions. If one does not have enough savings to meet the down payment requirement or do not want to break the emergency and savings reserves, one may consider a personal loan for down payment.
However, one must be careful while finalising a lender to take the personal loan from. The borrower should ensure that the lender customises the personal loan as per the requirement. IIFL Finance, for instance, customises the personal loan around the requirement of the borrower with a hassle-free application process.IIFL Finance instant personal loan comes with affordable and lowest interest rates. The application for the loans is processed within five minutes and without any extensive documentation. The personal loan EMIs are flexible and allow for better liquidity and easy achievement of set personal goals, including down payment for a house.