Home Loans are typically given on 80-85% of the entire property value. The rest of the amount (15-20%) which is to be paid to buy the property is called the Margin Money or the Down Payment. The banks require the property buyer to pay this Down Payment amount from his/her own pocket. To pay such a corpus which can range in tens of lakhs of rupees, it is crucial for you to gather your down payment amount in such a manner that it doesn’t burden you financially when the time comes to disburse the same. For this to happen, it would be beneficial for you to be aware of thebelow planning methods which can help you pay your Down Payment:
Save then Spend: If you plan to buy a home, then save for your home systematically. A well-planned saving which is spread-out in phases can help you in paying the down payment amount without causing much concern. Savings of this corpus can be done through initiatives like Recurring Deposits and Mutual Fund Systematic Investment Plans. It is vital for you to pay your EMIs on-time to keep your credit score up and that can only happen if you save for the down payment and pay it in the initial stage so that later you can timely pay the home-loan EMIs. Moreover, be careful if you plan to borrow from other sources to pay the down payment amount as such borrowing can lead to you paying two sets of EMIs-one for down payment loan amount and other for home loan payment amount. Additionally, if you are taking a loan for paying the down payment, then the bank may become uninterested to lend you a loan as the bank may stringently re-evaluate your capability to repay. Hence, ideally pay for your down payment through your savings rather than borrowing from a bank. Furthermore, if borrowing is the only option, you can consider borrowing from a friend or your employer or a relative too.