Home loan down-payment is the amount which the property buyer has to shell from their own savings and is not sponsored as loans. The down-payment amount needs to be paid to the real estate developer for the purchase of the property. Buying a property is a very crucial decision in an individual’s life. Thus should be taken care of while investing in a property. On average, an individual has to put at least 50% of their life savings while buying the property. Due to the rise in demand and the increase in the ready reckoned prices of the property by the government, the real estate prices increase regularly. On average, it can be seen that there is a steep increase in the prices of the property year-on-year or at least the decade. While the purchasing power of the people may or may not rise according to the inflation index. The government employees are entitled to DA, i.e., dearness allowance, which is linked to the inflation index paid for the rising inflation. Some private companies also do pay dearness allowance to their employees as and how the inflation increases.
Raising funds for the property is a difficult task. Thus the property buyer has to avail of loans for the purchase of the property. The bank approves a maximum of 80-90% of the property value as loans, while the rest needs to be paid as down-payment by the buyer. Funds can be raised by selling the equity shares, selling mutual funds units, breaking fixed deposits. Etc. The borrower can save money on interest repayment by making maximum down-payments and also reduce the liability on themselves for the loans. The property buyer can buy the property as much as 100% down-payments in case of the availability of the loans. But due to high property prices, very few people are able to manage to buy the property on 100% down-payment. Real estate is a booming field. The rising popularity of nuclear families and the rising population and migration of people from rural to urban areas lead to an increase in the demand for real estate. Many people are not able to buy their properties, especially in the metros and tier-II cities. Making a down payment of the funds takes a lot of time for the accumulation of the funds.
Ways to raise funds for your home down-payments:
- By withdrawing funds from financial investments:
The property buyer can withdraw funds from financial investments like stocks and mutual funds. The stock market is extremely volatile, so the right time should be chosen to sell the financial investments when the market is at its peak. This can help the property buyer utilize the funds gained from the sale of the stocks or equity-based mutual funds in the property’s investment.
- By breaking of the fixed deposits:
The property buyer can break the fixed deposits or utilize the funds of the matured fixed deposits for the payment of the property. Fixed deposits are a traditional and 100% safe financial instrument for increasing money.
- Withdrawing part of the provident fund:
Part of the funds from the PF can be utilized for the down payment of the property. In the case of the job running, only a certain proportion of the funds can be taken out from the employee provident fund for the personal use of funds.
- Sale of an alternate property:
The property buyer can sell the additional funds gained from the sale of the property, either the once self-owned or the once which is obtained from the inheritance ones. The price appreciation is consistent in the case of the property which is being already owned. But still, getting the right price is necessary for the property. But the appreciation for the property is consistent.
- Borrowing funds from friends, family, or siblings:
The property buyer either borrower funds from the known people, near and dear ones, for the down-payment of the property on the condition of returning the funds on time. Borrowing is the last option which the property buyer may have in case of unable to arrange the money for the down-payment of the property, which isn’t much a better option. Ideally, the property borrower should utilize their funds to buy the property and should not be dependent on others.
- Sale of the gold, diamond ornaments or mortgaging them:
The property buyer can either sell the gold ornaments or else mortgage with the bank to raise funds for the down-payment of the property. Mortgaging of the gold is a better option as the gold loans are provided easily by the banks for the mortgaging. Thus this can lead to dual loans on the property buyer. One is home loans, and the other is a gold loan.
There are various ways in which the property buyer can raise funds. It is easy to raise funds by some or the other way by the methods mentioned above. It is sufficient that the borrower at least raises 20% of the property value while the rest can be provided as loans by the bank.