For many people, owning a home is a dream. Unfortunately, it is difficult to use available funds to finance the payment of a house. 75-80% of the purchase price is often covered by a mortgage, leaving the remaining portion requiring financing from other sources. Given the dramatic increase in real estate prices, even financing 20% of the cost out of pocket puts significant pressure on finances.
Compare different homes that are in your price range and meet your needs. Next, find the best mortgage deal by researching the market. Figure out how much the lender is willing to give you, then work out how much you’ll have to pay yourself.
See if you can withdraw money from your savings or by selling low-yielding investments. Now calculate the shortfall. This is the amount of money you can borrow through a personal loan.
In the short term, a personal loan can be a great way to supplement your savings and pay the down payment. Plus, you’ll be able to complete the sale sooner, thanks to fast processing and immediate disbursement.
Benefits of using a personal loan as a down payment
Here are some benefits of using a personal loan to pay your down payment on a home:
- Simple eligibility requirements
- No collateral damage
- fast processing and distribution
- Small paperwork
- Flexible repayment terms
- No early termination fee after six months
- There is no need to access your emergency fund.
Let’s examine each point in more detail to better appreciate the advantages of taking out a personal loan in addition to a mortgage.
Simple eligibility criteria
An important factor in the popularity of personal loans among borrowers is the application requirements. You can apply for a personal loan if you are an Indian national or a resident with a monthly income above Rs 18,000.
No collateral required
As we have already mentioned, the best feature of a personal loan is that no collateral is required. This makes it very convenient for newly hired professionals looking to buy their first property.
Instant processing and distribution
An individual loan is processed and disbursed very quickly. For example, you can apply and get your loan disbursed within 24-36 hours with PaySense, one of the best loan apps. It’s amazing, isn’t it?
Yes. You read correctly. All you need to do to apply for a personal loan from PaySense is fill out an online form and upload the necessary documents.
- PAN card, Aadhaar card
- Three months of payslips
- For the previous six months
- The bank statement of the salary account
The loan provider assesses the loan application. Your loan is accepted and repayment is complete if your credit score is good and the other criteria are met.
Flexible repayment terms
You are free to choose the term of the loan according to your convenience. You can get personal loans from PaySense with amounts between Rs 5,000 and Rs 5,000,000. By adjusting the term, you can use a personal loan EMI calculator to get the EMI you are comfortable with.
Important things to remember before financing your dream home with a personal loan Set a budget
Before you start your property search, you need to choose a budget and stick to it. Buying a home is a major financial investment that requires careful planning. Having a budget can help you choose the best property and rule out larger homes that are outside your price range.
A budget can also help you determine how much you can afford to borrow from the lender when you intend to take out a home loan. To determine your EMIs and the amount of interest owed, as well as to prepare for repayment, use a Loan EMI Calculator.
Improve your CIBIL score
When applying for a loan, maintaining a high CIBIL score is ideal. Why? This is how the lender can use it to assess your creditworthiness.
Therefore, having a good credit score, ideally above 750, will make it easier to get approved for a home loan. Plus, you might be able to get more attractive interest rates. Therefore, take steps to increase your credit score and repayment history before approaching your lender. Learn how by reading the next point!