Home Loan

Complete Guide on How to Make the Down Payment on Your Home Loan


After a long day, only one person goes home to relax. It’s where people can do or say whatever they want without caring what others think or say. A place you rent is very different from your own home. You are in charge of designing the inside of your home (without having to seek permission from the landlord, as in the case of a rented place). Who you are is what you do in your own space. It’s also a sign of success and social status. It’s often the biggest choice and deals someone makes in their life. But it’s not an easy job. The amount at stake is big enough to make careful planning important.

How to Finance Your Home Purchase? 

You would be better off if you didn’t sell your long-term investments to pay for your property quickly and cheaply. You should only sell long-term investments as a last resort because it will change how you plan your finances. A housing loan is the best choice because it helps you get money when you don’t have any and lets you buy a home early in life by putting up your future income as collateral. The best way to pay for a house is to borrow as much as possible and pay it back according to the lender’s terms.

Problems with the down payment

A home loan requires you to put down at least 10% of the cost of the house, which is based on your qualifications. Also, the lender, a bank or a housing finance company, would pay for the rest (the home loan amount). The down payment is the amount you have to pay out of your own money toward the cost of the home.

After picking a house, you might be in a tough spot regarding the down payment. If you have to pay for something immediately, you should save money. This problem is made worse by the high cost of housing. Also, buying a home means waiting to pay for it, which means taking a chance that real estate prices will increase even more. Even though it may seem hard, there are ways to make getting the money for your down payment easier.

Some tips on how to save on your own for the down payment

Make a Corpse

The easiest way to save up for a down payment is to put your savings into one big pot. You can use compounding to grow your savings into a large sum of money if you start saving early in life, preferably as soon as you start working. In the beginning, you might want to think about putting your money into high-return assets like stocks. Then, you must write down how much money you made and put it into safer investments, like a bank fixed deposit. Make a budget, track how much you spend each month, and work hard to cut back on purchases you don’t need.

Pay off your high-interest loans to get rid of more debt and increase your monthly savings.

Release in the right amount

This is a service that a small number of lenders and developers offer to clients in secret for new building projects. If you choose this option, you can pay your down payment in small amounts instead of all at once. Because building takes years, you can pay your down payment in parts, and the lender will release loan payments based on when you do. The pressure to come up with a big down payment all at once is lessened.

Don’t take out a loan from a savings account or life insurance.

If you have no choice and a home is a long-term asset that increases in value over time, you might want to use your long-term savings. You might want to borrow money from your savings account or life insurance plan. Over time, you can pay off the loan with your own money.

How big of a down payment should you make?

Even if the lender requires a minimum down payment, you can pay the minimum or more if you can. Both have good points and bad points.

Pros of Putting down a bigger down payment on a house

There are benefits to making a bigger down payment, such as:

  • Since you have more money invested in the property, you borrow less money.
  • Since interest rates change based on the loan size, a smaller loan can mean a lower interest rate. For example, the interest rate for Rs. 20 lakh may be lower than the rate on a loan for Rs. 40 lakh. This will depend on the rules of the lender.
  • Because it gives the lending institution more security, a smaller loan amount makes it more likely that the loan will be approved quickly.
  • Since registration fees and home loan insurance are based on how much the loan is for, this saves money.

Cons of Putting Down More Money on a Home

There are some problems with making a big down payment, such as:

  • Your own money is tied down for a long time, which makes you less able to move it around. In a crisis, this could cause a financial crisis.
  • You get tax breaks when you pay off your mortgage, both the principal and the interest. Fewer tax breaks come from smaller loans.
  • To make your house a home, you might need more money first for things like buying furniture and durable goods, making repairs or renovating, etc.


In the past, people in their late 40s and early 50s often bought their first homes. People used to save money until the end of their careers, and then, after paying for important things like their children’s education and their wedding, they would buy or build a home within their budget. But things have changed. People want to buy their own homes even in their late 20s and early 30s. They don’t want to buy their first home until they are in their fifties. If you want more information, you should go directly to Piramal finance.