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!

26 Oct,2022 18:07 IST 66
Personal Loan Financing For Down Payment Of Home

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.
Zaroorat aapki. Personal Loan Humara
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Personal Loan Approval And Features

Lenders 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.

Conclusion

Unlike 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.
Zaroorat aapki. Personal Loan Humara
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Disclaimer: The information contained in this post is for general information purposes only. IIFL Finance Limited (including its associates and affiliates) ("the Company") assumes no liability or responsibility for any errors or omissions in the contents of this post and under no circumstances shall the Company be liable for any damage, loss, injury or disappointment etc. suffered by any reader. All information in this post is provided "as is", with no guarantee of completeness, accuracy, timeliness or of the results etc. obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. Given the changing nature of laws, rules and regulations, there may be delays, omissions or inaccuracies in the information contained in this post. The information on this post is provided with the understanding that the Company is not herein engaged in rendering legal, accounting, tax, or other professional advice and services. As such, it should not be used as a substitute for consultation with professional accounting, tax, legal or other competent advisers. This post may contain views and opinions which are those of the authors and do not necessarily reflect the official policy or position of any other agency or organization. This post may also contain links to external websites that are not provided or maintained by or in any way affiliated with the Company and the Company does not guarantee the accuracy, relevance, timeliness, or completeness of any information on these external websites. Any/ all (Gold/ Personal/ Business) loan product specifications and information that maybe stated in this post are subject to change from time to time, readers are advised to reach out to the Company for current specifications of the said (Gold/ Personal/ Business) loan.

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