Buying a house is a dream of many. However, that dream can quickly become a source of concern when you realise how much you need for a home loan down payment. To many, accumulating such a significant amount can be worrisome, and who wants to wait forever to become a homeowner?
This is where a personal loan can help. While a personal loan may not be the first option that comes to mind when taking a loan to buy a house, it can effectively bridge the down payment gap, helping you achieve your dream home sooner. However, before applying for one, understand why a personal loan is a smart choice for a home down payment.
Home loan down payments
A down payment is a significant factor when applying for a home loan. It is a percentage of the total cost of a home that buyers must pay upfront. In India, the minimum down payment for a home loan typically ranges from 15% to 20% of the purchase price.
The larger you pay the down payment, the smaller your loan amount will be, reducing your home loan EMIs and interest over time.
Benefits of a personal loan for a house down payment
A personal loan to cover your home down payment can offer several advantages. While it may not be the traditional route, it’s worth considering the following benefits:
Saves your emergency funds
We never know when our finances might take a turn for the worse, so it’s always better to keep our savings intact for financial setbacks.
Opting for a personal loan for the down payment on your home saves you a lot of money and allows you to be better prepared for unexpected expenses. It provides you with the necessary funds without compromising your financial stability.
Minimal documentation
Generally, securing a personal loan involves less documentation and a more straightforward approval process. It can save you the time spent gathering extensive paperwork.
Additionally, many platforms like Quid help you connect with reliable financial institutions, letting you instantly apply for an online personal loan. This convenient process allows you to complete the loan application from the comfort of your home, which helps you get the funds you need faster.
Flexible repayment schedule
A personal loan often comes with flexible repayment tenure, allowing you to choose a schedule that fits your financial situation. Whether it’s a shorter tenure with higher EMIs or a longer tenure with lower EMIs, you can select a personal loan term that suits your budget and repayment capabilities.
If your finances take a positive turn, this flexibility can be particularly beneficial in fulfiling your obligations sooner. A flexible repayment schedule can help you manage your debt more effectively and reduce the risk of defaulting on loan repayments.
Collateral-free
A personal loan is typically unsecured, meaning it is collateral-free. And, if you don’t have significant assets to pledge or prefer to avoid risking your property, personal loans can be a viable option.
Being collateral-free also means the approval process is generally quicker and less complicated. However, missing monthly EMIs can significantly affect your credit score and financial health.
Quick disbursal
Personal loans are known for their fast disbursal times, making them an excellent option for those who need funds quickly. Many lenders offer rapid approval and disbursal timelines for applicants who meet their criteria.
So, by ticking the boxes of the lender’s eligibility criteria, you’re more likely to get your loan approved sooner. This helps you expedite your home purchase process, avoiding delays that can arise from waiting for funds.