Struggling to arrange sufficient funds for the downpayment of your home loan? Well, besides the fact that lenders are only willing to extend a housing loan if borrowers can cover a portion of the home cost first-hand, paying a good amount of downpayment lowers your home loan EMIand interest paid. Depending upon the time window you have before you apply for a housing loan, here are a few handy tips to make your downpayment process smooth and easy.
Tip#1 Build a corpus
Building a corpus takes time and requires much discipline, but developing a habit of saving early in life, perhaps at the start of your career, will snowball your savings into a meaningful corpus by the time you need funds for home loan downpayment. It all starts with monitoring and maintaining a monthly budget while depositing the excess into safer investments such as fixed deposits. The key is to curb impulse and wasteful expenditures.
Tip#2 Seek help from your family and friends
Well, sensitive an issue as it is, you are the best judge as to whether or not you can seek the help of your immediate family, relatives, and friends for home loan downpayment. People have indeed walked this road before you, and have found much-needed support, so it never hurts to try. However, a word of caution – to keep your relationships unscathed and to still benefit from their financial help, try not to ask for big loans from your family and friends. Also, make it a priority to pay off their loan as soon as you can.
Tip#3 Take help of Central schemes
The PMAY or Pradhan Mantri Awas Yojana scheme was launched by the Central government to make housing affordable for all. So, you’d do yourself a disfavour by not leveraging its benefits. As you get to save on your monthly home loan repayment amount, you can direct those savings towards your downpayment. So, go through the PMAY eligibility criteria and if applicable, avail the scheme’s subsidy and other benefits.
Tip#4 Raise funds from your investments
Investments are assets, and as assets, valuable sources of income to meet funding needs, even that of downpayment. If you own a thriving investment portfolio, now would be the time to unbolt its potential to raise funds – be it mutual funds, shares, or fixed deposits.
Tip#5 Consider unlocking your long-term savings
Now, this is a last resort and an option best-suited for those who are well-advanced in age and have little to no time before they need to pay downpayment on their home loan. However, considering that a home is a long-term asset whose value only appreciates with time, it is a worthwhile option. You can take a loan against your life insurance policy or provident fund and slowly repay it over time.
Gone are those days when people tarried till their 40s and 50s to purchase a home. Millennials are becoming homeowners even before they hit their 30s, and it only takes a little planning and a whole lot of discipline and persistence. So, the best time to start is early!