Start with the Hardest - The Management of Down-Payment


Buying a home is one of the most challenging financial decisions that a person makes. A lot of planning and careful mapping needs to be done and several factors are taken into consideration before one can finalise buying a house for themselves. Whether you are planning to invest in commercial projects in Goregaon or an apartment in Thane east, one has to arrange for the apt financial support and ensure that the place is worth the investment.

Many people postpone buying a house as they find it difficult to raise money for the down payment. Procuring money for home loan down payment is not an easy task, but there are a number of ways to make it happen now. Home loans are now easily available and act as a boon for prospective buyers. While the banks only sanction 85% of the total value, the remaining 15% has to be arranged by the buyer. It is also a known fact that the more you pay upfront, the easier the loan payment becomes.

Here are a few tips to manage your down payment to ensure you don’t have to give up on your dream house.

1.    Smart savings  

It is advisable to start building a corpus for home buying with small savings in the form of equity investments, right from the beginning. Planning 4-5 years in advance can help you save for your down payment without affecting other financial goals in terms of medical, educational and retirement savings.
One should also keep in mind to separate funds for emergency cases and not liquidate all their savings. Registration charges, furnishing expenses and maintenance charges, which will be incurred after the property is bought, should all be kept in mind.

2.    Choosing the right bank

Some banks enter in an arrangement with reputed builders wherein the loan borrowers can pay the down payment in instalments rather than all at once. This is known as proportionate release. This reduces the burden on the buyer a bit as they don’t have to pay a large amount in one go. The bank, however, makes the payment to the builders only after they receive the final instalment for the down payment. It should be known that not all banks have this arrangement and it should be confirmed before taking up the loan.

3.    Try for a ‘Soft Loan’

Soft loan refers to a loan from your family. There is often very low or no interest and saves you a large sum at the end of the process. It is a common practise to seek help from family in such cases. It is hassle free and doesn’t involve innumerable visits to the bank. However, these should be taken on very clear terms and only when you are sure that you will be able to return the money as promised. Such issues can often lead to unpleasant equations within the family.

These are a few ways to manage the down payment for your dream house. Whether you’re looking for ready flats in Mumbai, or a penthouse in Pune, the financial situation needs to be mapped and planned efficiently.

Location: Mumbai, Maharashtra, India

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