For instance, if you need a loan to buy a home for Rs. 70 lakh, a bank will typically only lend you about Rs. 56 lakh; as a result, you’ll need to come up with a down payment for a Home Loan in Chennai of about Rs. 14 lakh. Undoubtedly, that sum is not small. There will also be extra costs, such as stamp duty.

The real question is how you will do that given that, if you did not inherit any money, you will have to earn it. Given how frequently personal loan interest rates are high, is doing so wise? If this is your first time buying a home, the advice in this article will help you save money for a down payment.

Friends or family

Find out if your parents, relatives, or spouse can lend you money for a down payment on a home loan and whether you intend to repay them before looking into any other options. Compared to the alternatives below, this option will save you a tonne of time, work, and paperwork in exchange for a dependable lender who will be understanding if you are unable to repay the loan by the due date due to an unforeseen circumstance. However, there is a word of caution in relation to this decision. You must act professionally in this situation because breaking your promise to return the money on time could damage your relationship.

Removing funds from the provident fund (PF)

Did you know that PF withdrawals made by EPFO members could be used to pay for some housing-related costs? You may borrow money for a home worth up to 36 times your annual salary if you have a PF account. However, withdrawing funds from your pension fund may require a lot of time and paperwork. If you select this option, you must inform your employer so they can validate your application and forward it to the regional EFP office for processing.

Loan backed by insurance

When you take out a loan against your insurance policy, you may borrow anywhere between 75% and 90% of the surrender value. Let’s just say that the surrender value is the sum you get when you voluntarily cancel your insurance policy. Consider the following illustration: When you applied for the loan, the surrender value of your insurance policy, which has a face value of 50 lakh rupees, was only 20 lakh rupees. You might be able to get a loan approved for between Rs. 18 and Rs. 19 lakh. However, you should be aware that the interest rate is significantly higher than that of a conventional Home Loan in Chennai before taking out a loan against an insurance policy (often between 10 and 12 percent). Furthermore, traditional life insurance policies rather than term insurance are used to secure the loan amount. In addition to the monthly premiums, the policyholder is responsible for loan interest payments; if they are not made on time, the policy will be void.

Personal loan

Financial experts advise against using personal loans to cover a down payment for a mortgage as a last resort. Personal loans frequently have interest rates between 11 and 24 percent, making them significantly more expensive than secured lending options due to the high risk they represent to lenders. However, it is acceptable to finance the initial investment with a personal loan. If you have good credit and a reliable source of income, you might be eligible for a personal loan with a lower interest rate.

Personal loans are frequently considered a last resort when saving for a down payment on a home is not an option; however, only use them if absolutely necessary. Remember that getting a personal loan with a high interest rate (over 11-24% annually) may make it much harder for you to get a loan in the future. Additionally, your credit report may be impacted if you default on a loan.

Although it’s best to avoid taking out any personal loans at all costs, we understand that not everyone has the luxury of time. If you have good credit, are eligible for one, can get one with a low interest rate, and have explored all other options, you might want to think about applying for a personal loan to pay for the down payment on your home.

Loan secured by shares or other assets

You can finance your down payment on a Home Loan in Chennai by using assets like stocks, bonds, insurance policies, and other forms of liquid capital, like cash, as an alternative to taking out a high-interest personal loan. Most banks accept a wide range of financial assets as collateral for loans, including Demat shares, mutual fund units, insurance policies, and securities. If you take this route, you won’t have to sell any of your stocks if you suddenly find yourself in need of cash. Another option is to sell your assets and possessions. Real estate, things you already own, and investments like FDs and MFs can all be sold to generate income.

In conclusion

mortgage financing requires a down payment of between 10 and 30 percent of the property’s value. Finding a loan with an interest rate that meets your needs shouldn’t be difficult because Home Loan in Bangalore interest rates are frequently lower than those on most other loans. Only borrow the amount necessary for a down payment. By doing this, you can ensure that paying off the debt won’t put an excessive strain on your finances.

The post Ways to get funds for Home Loan in Bangalore down-payment appeared first on Tech InShorts.

A home loan is a kind of financial support offered by financial institutions to assist you in buying, construct, rebuild and renovate your home with ease. Financial institutions are even referred to as lenders. Home loans are generally long-term loans than the usual vehicle loans or personal loans that lenders offer after an in-depth evaluation of the eligibility of the applicant. Moreover, the eligibility of a specific property for which the credit option is applied is even taken into account. Continue reading to understand the repayment tenure for a home loan that you must apply for. Additionally, there are also details linked with the application procedure, repayment schedule and set of documents required. 

What is known as home loan repayment tenure?

The overall repayment period for a home loan is addressed by the term ‘tenure’. The highest tenure of the home loan is based on different parameters like age, time left for retirement, monthly expenditures, monthly income, etc. Banks and various other financial lenders provide the highest home loan repayment tenure of 30 years. However, they even require you to repay the loan before you retire from your employment services. You, as a home loan applicant, can select your repayment schedule depending on your financial preferences. There are 2 major kinds of home loan repayment tenures – long-term home loans and short-term home loans. Let’s understand here which one you must select. 

Short-term tenure or long-term tenure for a home loan – which tenure must you select?

The choice of home loan tenure is based on your yearly and monthly debt obligations. If you hold a higher income and fewer debt obligations, you will simply be able to pay a bigger portion of your income as home loan EMI. In this scenario, selecting a short-term tenure for a home is advisable. 

On the contrary, if you hold a considerable number of debts every month, you must ensure to divide your home loan proceeds into smaller portions and select a long-term home loan repayment tenure for hassle-free repayment. There are various other parameters too that you must account for and note when selecting a home loan repayment tenure. Keep reading to better understand. 

Check and Apply for: Tata Capital home loan

What are the parameters impacting the home loan repayment tenure?

Read on to find below specific key parameters that impact your home loan repayment tenure. 

∙       Your age – Your age is one of the crucial parameters that impact the choice of your home loan repayment tenure. Most financial institutions offer a repayment tenure of as high as 30 years or until the age of retirement.  The age of retirement for employees in India ranges anywhere between 58 and 65 years. Read on below the know the details for the employees working in distinct streams. 

In the scenario of self-employed individuals, the highest repayment tenure can be up to 30 years for the age groups between 60 and 65 years. The repayment tenure duration differs from lender to lender. An individual availing of a home loan in the early years of employment can use the benefit of higher repayment tenure, which converts to a lower EMI requirement or higher loan proceeds. 

Home loan proceeds – Home loan proceeds are another important parameter that impacts your home loan repayment tenure. Lenders form home loan repayment schedules depending on the sum of principal loan proceeds and applicable interest constituent on the basis of the home loan rate offered. You, as a borrower, get the flexibility to choose the duration depending on your monthly income and home loan instalment. For instance, if the overall home loan proceeds are over 3 per cent of your income (yearly), you can save considerably on the interest by selecting a shorter home loan repayment tenure.

Existing loans and debts – As mentioned already, you must ensure to keep in mind your prevailing debts and loans before selecting the home loan repayment tenure. You may even consider settling a few such debts or combining them into one loan to enhance your capacity to borrow. You can also select a higher repayment tenure and lower your instalment amount on the home loan. In this way, you can simply continue to manage all your existing outstanding debts while enjoying the benefits of a home loan. 

Loan repayment potential – Your potential to repay your home loan even impacts the choice of your home loan repayment tenure in distinct ways. For instance, you can opt for a home loan instalment amount depending on your budget requirements (monthly). If you select to pay a higher amount on the home loan each month, the repayment tenure on the home loan will be short. In the same way, if you select to repay your overall home loan proceeds in smaller instalments, your loan repayment tenure will be higher. 

What is the prudent home loan repayment tenure?

While availing a home loan, there’s no ideal or best tenure as such. Selecting a repayment tenure is totally based on your financial status, preferences, and other important goals in your life. Few may consider paying a higher loan EMI and closing the home loan as early as possible. This permits you to make higher savings in your midlife. A huge number of applicants for home loans may select to pay the lowest EMI possible so that they get a higher cash flow to meet their other expenditures. However, few may look to strike a good balance between paying the loan faster and having a satisfactory disposable income.

So, with proper financial planning and regular savings, long-term repayment tenure home loans may be closed as early as possible by making smaller prepayments along with regular EMIs. It gives good flexibility in availing of a higher home loan amount while paying a lower EMI.

The post What Is the Ideal Home Loan Tenure – 10, 20 Or 30 Years? appeared first on Tech InShorts.