The first hurdle of owning a home can often be the down payment. The question is, will you be able to buy a house with no down payment at all?
According to the Reserve Bank of India's guidelines, the short answer is “no”. The offer of 100% financing on real estate is restricted to banks and credit institutions. They are limited to offering only a certain percentage of the property value based on various factors. This regulation protects banks and borrowers to ensure a balanced real estate market.
The Indian government offers several schemes for first-time homebuyers, particularly in the affordable housing segment. These schemes help subsidise interest rates or even part of the down payment. One such scheme is the Pradhan Mantri Awas Yojana (PMAY) which helps you by giving an interest subsidy of up to 6.5% on home loans. Keep in mind the criteria for eligibility under these schemes.
Every rupee you save is going to get you closer to your goal. To create a disciplined savings habit, explore options such as recurring deposits or SIPs in Mutual Funds. For quick cash injection, think about selling idle assets such as gold or obsolete tools and gadgets.
There may be a win-win situation if you communicate with your family openly. Look into the possibility of applying for a joint loan with parents or siblings who would be able to contribute towards the down payment.
If you do not have the necessary funds to cover the remainder, it is always possible to apply for an unsecured loan from a bank or lender. Hypothetically, if your property value is Rs.40 lakh of which 36 lakhs is covered by the home loan, you can then bridge the gap of Rs.4 lakh by taking another loan. If you have a good credit history, you may also qualify for an attractive rate on your personal loan.
Some organisations support their employees by letting them take personal loans at lower interest rates. If your employer offers this facility, employee loans require little documentation and are an excellent way of securing funding to pay down the mortgage. Remember, to pay less interest on your overall home loan, always try making a larger down payment.
Lastly, buying a home is a long-term commitment. While no down payment scenario may seem attractive, it is essential to assess the state of your finances in detail. Your loan burden is reduced by a higher down payment, which means lower monthly interest payments. Creative strategies can often bridge the down payment gap and turn your dream into reality.
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