Home Loan

Purchase Your New Home with Zero Down Payment Housing Loan


For all of us, buying a home is a dream. The markets now offer many house loan programs. This makes things easier than ever. You can properly secure the money to purchase a home. House loan interest rates have decreased a lot over time. Occasionally, you can get a loan even at 8.5% p.a. 

But, most lenders only give 90% of the property’s worth. A down payment of 10% is required. It is followed as per RBI guidelines. Depending on the cost of the house, the sum can vary. If the value of your home is higher, the down payment will likewise rise in line with it. What if there isn’t enough money in your bank account? The situation might get difficult. 

 Many will want a way to reduce the down payment to zero. To be frank, there isn’t a way to nullify it. However, there are ways to reduce it. Before we get into the ways to reduce it for a house loan, let’s discuss the down payment.

What is Down Payment? 

It is the amount a buyer pays at the beginning of a good or service purchase. The down payment covers a part of the full price. The buyers usually take a loan to cover the balance.

  • It’s an upfront payment made in a purchase. This article, it’ll be focused on house purchases and house loans.
  • Buyers obtain loans to cover the remaining balance of the purchase price.
  • The more money the buyer puts down, the less they’ll need to complete the deal. It lowers their monthly payments.

Ways to Reduce/Compensate for Down Payment

Apply for an unsecured loan

An unsecured loan can save the day if you lack the money for a down payment. Let’s say your property is worth Rs. 80 lakhs. You can secure a house loan of Rs. 55 lakhs. Now, Rs 25 lakhs are left to cover. For this, you can get an unsecured loan. 

Try to keep your credit score around 800 or more. This will get you a personal loan at a favourable interest rate. It also applies to house loans. Try to raise your credit score before taking a loan.

Participate in the Pradhan Mantri Awas Yojana program

 This is a government-sponsored program. It gives affordable homes to people in need in urban areas. According to the plan, you might receive a house loan interest rate rebate of up to 6.5% if you qualify. The amount of the subsidy, however, depends on your income range.

Make use of your investments

It’s always good to begin investing young. A strong investment profile is useful in many ways. You can withdraw money from your investment to pay for the down payment. You can also get a loan against mutual funds or fixed deposit accounts. The loan will help cover the needed down payment sum. The interest rate given will probably be cheaper than an unsecured personal loan. It is so because these loans are secured. As a result, there will be less repayment load.

Get a loan from Employers

Many employers provide their employees with low-interest loans. These loans are for general purposes. Such loans are easy to obtain and require little paperwork. If your employer gives such a service, you can use it. It’ll help to secure money for the down payment on your house loan.

In these cases, your relationship with the employer is crucial. It matters how long you’ve worked for them. You might have to submit proof of a house loan. 

Prepare properly

Proper planning is important for funds. It’ll be very useful for reducing the down payment. Setting aside a part of your monthly salary for this is prudent. You can also invest money in the following:

  • Gold 
  • Fixed deposits
  • Mutual funds, etc. 

The purpose is that you shouldn’t become financially stressed. Down payment often leads to this. Good planning will let you avoid these cases.

Sell some Assets

This route may also help with the down payment. It includes any assets that you can liquidate at that moment. These can include: 

  1. Real estate
  2. Easily traded bonds
  3. Intangible assets
  4. Automobiles
  5. Jewellery

Borrow from your relatives and friends

It is understood that buying a home is costly. If your friends or relatives could lend a hand, that would be very useful. Find out if they can assist with the down payment. It’s a simple method for allocating money. It saves time and effort. There will likely be no interest on the amount you borrow. Moreover, you are not subject to any late penalty fees. This might go on even if your payments are late.

Things to Keep in Mind

  • It might be hard to get a new loan. To maintain your credit score, you must make your payments on schedule. You can find yourself in debt if you take out a house loan with no down payment.
  • The effects of taking money from family may not be what you expect. Indeed, you won’t have to deal with much if you borrow money from relatives. But, if you fail to pay the loan, your family ties may suffer.
  • Secured loans could put your assets in danger. You risk the assets when you take out a loan with security. Think twice before requesting these loans.

Summing up

It’s best to plan well before you take out a house loan. You need to avoid all the risks. It is better to have enough money in your bank account. You won’t feel as pressured and can purchase your dream home without worrying about money. 

Piramal Finance will be your best source of help to avoid risks and reduce down payments. We provide a wide range of financial services and advice. For further details, you can visit Piramal Finance. It’ll be our sincere pleasure to serve you.