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Home Loan Down Payment

Zero Down Payment Home Loan

Last Updated 30th Oct 2020

  • Home loan down payment is a significant part of home loan, which is personally financed by the borrower.
  • Banks provide a maximum LTV of 90% and the borrower pays the remaining as a down payment.
  • Higher the value of the property, higher the down payment.
  • Tips to get a home loan at zero down payment home loan.
  • Avail a mix of secured and unsecured loans.
  • Apply for Pradhan Mantri Awas Yojana.
  • Opt for a home loan from your organisation or friends/family.
  • Utilise your investments, if there are any.
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Easy Ways to Get Down Payment Funds Ready

In the present era, buying one’s own home is a dream for all. However, it is the home loan and largely the tailor-made home loan schemes for different types of home loan borrowers that have made the housing dream real and liveable. In addition to that, the affordable home loan interest rates beginning from 6.95% and higher LTV ratios up to 90% of the property value add more to the convenience offered by home loans. However, what troubles the home loan borrower is the downpayment to be made on the home loan.

The home loan down payment is the remaining percent as per the LTV ratio. Thereby, if the LTV of 90% is offered on home loans, a down payment of 10% is to be made on home loans. The higher the value of the property, the higher the down payment amount. This may take a toll on one’s finances in case there’s a lack of funds. However, there are certain ways in which the burden of home loan down payment can be reduced.

5 Easy ways for Home Loan Down Payment

At times, the various banks offer zero down payment home loan, yet others are some lenders who offer home loan with down payments. Thus, various lenders consider home loan down payment as an unavoidable cost that every borrower needs to fulfil, yet, there are some of the ways in which home loan down payments can be made easy. These are listed as follows:

Opt for an unsecured loan

Opting for an unsecured loan for a downpayment on the house is a good way to deal with the financial crunch emerging during the time of home loan down payment. To ease out the home loan down payment, you can borrow a secured loan for the required amount. For instance, if you are required to make a downpayment of ₹ 10,00,000 but you only have ₹ 7,00,000 at hand, then, you can opt for another unsecured loan worth ₹ 3,00,000. Opting for an unsecured loan like a personal loan will be easier if you are somebody with a good credit history.

Utilize the investments

It is in time like these that holding a good investment portfolio works wonder. Investments are not only a better spot for the future, but may also help one to cope up the financial shortcomings in time of dire needs. Thereby, if you fall short of home loan down payment by any amount, you can break a part of your investment to fund that need. In addition to that, investments like fixed deposits and mutual funds can help you borrow a secured loan, against them. This again is beneficial, since the interest rates charged on a secured loan is any day lower than an unsecured loan.

Apply for Pradhan Mantri Awas Yojana

Pradhan Mantri Awas Yojana is a housing loan subsidy scheme regulated by the Government of India. The scheme aims at providing affordable housing to the economically backward sections of society. As per the scheme, income group earning up to ₹ 18,00,000 per annum can avail subsidy on home loan interest rates. Thereby, signing up for a home loan with the PMAY subsidy will help you lower your home loan burden, and thereby a lower home loan down payment due to a lower minimum down payment for a home loan.

Opt a loan from the organization

At times various organizations tend to lend loans to their employees in times of need. This, however, is dependent on several factors such as employer-employee relationship, and employment tenure amongst others. Loans from the organization involve the least documentation; thereby, they are easy to avail.

Things to Consider

Though easing down the home loan down payment is something to work upon, yet, certain things must be kept in mind. These are listed as follows:

  • Borrowing a loan to repay another loan is advisable only when it is done following one’s financial capability. In case you borrow a loan without monitoring your repayment ability, then it could be a burden and could affect the credit score badly.
  • While borrowing funds from friends and relatives ensure that you borrow funds from trustable people, also, the failure of repayment can hamper one’s personal relationship.
  • Lastly, making investments to use is required in times of crisis. However, borrowing a loan against these investments could put them entirely at risk and can hamper one’s investment portfolio.

On a concluding note, it must be understood that while borrowing a home loan and easing out downpayment is easy. Yet, proper planning of finances before availing any loan is a prerequisite. Borrowing as per your repayment capability is the best thing to do to your loan.

FAQs

What is the minimum down payment on a house?

Borrowers have to pay a minimum down payment of 10% of the value of the property on a house as banks provide a home loan on a maximum LTV of 90%.

Can you use a personal loan for a down payment?

Yes, opting for an unsecured loan like a personal loan for a downpayment on the house is a good way to deal with the financial crunch emerging during the time of home loan down payment.

How much should I put down on a home loan?

Most of the lenders require 10%-20% of the value of the property as a down payment. You should try to get a home loan with a minimum down payment.

What is down payment on a home loan?

Banks provide a maximum LTV of 90% on a home loan. Borrowers pay the remaining value of the property, which is known as a down payment or “one’s own contribution”.

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