How to Use a Personal Loan for Your Home Loan Down Payment?
Being able to buy your own home is a dream that many people harbour. However, in an economy marked by inflation, paying for your home from your savings may not be easy. Taking a home loan helps as lending institutions fund to the extent of 60-80 per cent of the value of the property you wish to purchase. However, this leaves with nearly 20 per cent of the property’s value that you may have to pay as a down payment.
Getting a Personal Loan for Down Payment
The dearth of necessary money must not deprive you of owing your dream home. It may prompt you to either postpone the decision to purchase a property or settle for something cheaper. Instead of disappointing yourself or your family members, a good idea is to opt for a personal loan. While getting a home loan may be difficult, getting a personal loan is quite easy. The major advantage is that it is your choice to share ‘the purpose of taking the loan’ with the lender. So, if you are taking the loan to make a down payment, you will get the loan amount you require as long as you are meeting the eligibility and other criteria stated by the lender.
Why Take A Personal Loan?
Personal loans are essentially money borrowed at specified interest rates that mitigate sudden financial requirements. Many people are weighed down by the misconceptions surrounding the loans and therefore do not approach a lender. But its immediate availability and timely repayment justify its benefits, some of which are mentioned below:
Affordability of Loans
One of the primary benefits that intended borrowers of personal loans enjoy is that they do not have to pay any collateral to secure the loan. Being unsecured, these loans can be availed without giving any security in return. Personal loan interest rates vary among lending institutions and are much lower than loans sought against credit cards. The interest rate charged on personal loans may range upwards of 13% . Moreover, these interest rates have a lot to do with your Credit Score and are considerably lower for those with a good loan repayment history.
Personal loans are way cheaper and incur much lower annual percentage rate (APR) when compared to credit card loans. They are also more straightforward than the payday loans available in the market.
Availability on the web and mobile apps have made it easier to apply for personal loans. You must decide on the adequate loan amount that you require and choose the loan tenure. The personal loan calculator available online allows you to gauge the interest amount, thus, allowing you to decide and apply for loan accordingly.
The documents required for personal loans are minimal, thus, explaining, their growing popularity among intended borrowers. You can seek a personal loan from any lender with documents showing proof of your identity and residence. Those eligible for pre-approved loans do not have to submit any document. However, do remember you will be required to produce KYC documents along with income proof, age proof, residence proof and more.
Flexible Loan Tenure
The flexibility of loan tenure is another benefit that we cannot ignore. Lenders allow their customers the flexibility of choosing from different loan repayment periods. Allowed for a period between six months to five years, you may choose the loan tenure depending on your financial circumstances. Also, pocket-friendly repayment strategies mean affordability of instalments – this translates to optimised monthly outgo.
Timely approval and quick disbursal of loans are that for the loan amount to make your down payment. You gain from this benefit irrespective of your choice of lender. If you meet the eligibility criteria of the loan, then the loan is disbursed within 48-72 hours.
Better Credit Score
It is important to realise that taking a personal loan can also help improve your credit score by adding variety to the types of account that you have.
Buying Your Dream Home With A Personal Loan
Whether it is paying for a builder flat or house on a plot of land, making down payment requires a few lakhs of rupees. A personal loan allows borrowers to use the loan amount for the down payment of their properties. Do your research for a lender you can trust and who offers credible and transparent services.