Personal Loan for Down-payment of Home loan: Everyone has a dream to have their own house, but the cost of buying a house is skyrocketing, and because of that, most people have to take a loan to buy a house. But, as we know, a loan is not an answer to our every expense. And banks give us a loan up to 75-90% of our purchase amount. We have to pay the remaining amount from your pocket. It is also called down-payment.
Suppose you buy a house of 30 lakh rupees in such a situation the bank will not give you a loan of more than 27 lakhs. You will have to pay the remaining Rs 3 lakh.
If you have invested wisely, then you must have accumulated this money. But if you haven’t, then you have a few options:
- You can borrow from your family or friend for some time. But, chances are that you are not going to get it.
- You can take a loan from your employer. This is not a good idea either.
- You can take a gold loan, property loan, mutual loan etc.
- You can take a loan from the provident fund.
- If you have any investment, then you can collect money by selling it.
But you don’t have that option, then what will you do? There is still one option left.
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You have the option of a personal loan. Personal loans are unsecured loans, and you do not have to provide any security. Personal loans are also easy to access.
But, should you take a personal loan for a home loan’s down payment?
Let’s consider a few things.
- If you take a personal loan, then you will have to repay two loans. First, home loan and second personal loan. You have to see whether you will be able to repay the loan or not.
- Your home loan maximum limit depends on two things; the first is the value of the house you buy, and the second is your loan repayment capacity. If this limit is due to the value of the house (and your loan repayment capacity is high), then you will probably pay off two loans. Example: You can repay a loan of 50 lakhs, but you cannot get a loan of more than 27 lakhs due to the cost of the house being 30 lakhs. Here personal loan will not bother you so much.
- But if your loan repayment capacity is less. Suppose the cost of the house is Rs 40 lakh, but your loan repayment capacity is only Rs 30 lakh. In such a situation, the bank will not give you a loan of more than 30 lakhs. Now, if you somehow take a personal loan of 5 to 10 lakhs, then how you will repay it? There can be a lot of problems in such a situation.
- The interest rate of personal loans is also very high. This will increase the personal loan EMI.
- If you take a personal loan for the down-payment of the house, then you also get some tax benefits on the payment of the same. Tax benefit up to Rs 2 lakh is available under section 24 for payment of interest. No tax benefit is available for payment of principal.
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What you should do?
According to my advice, avoid taking a personal loan for a home loan down payment. You may find it difficult to pay the EMI of the loan. Your monthly budget will also be affected.
Not only personal loans but also avoid taking other loans such as gold loans, property loans etc. These loans also have to be repaid.
If you are thinking of getting a house, then start depositing money for the down payment right now. You can withdraw some money every month and put it in Fixed Deposit, Recurring Deposit Liquid Fund.
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