Know about a Home Down Payment before Buying a Home in India

Source: HomeCapital Website

Owning a pretty home is everyone's dream. Nobody wants to pay rent all their life. So home buyers need to prepare carefully and make decisions. Home loans are available at varying interest rates, with each mortgage. A good awareness of a home down payment is a must if you intend to take a home loan. 

Here are some statistics to give you a good picture of India’s home down payments:- 

1. First, know about a home down payment- Home down payment is an initial capital outlay you incur when you purchase a home. Instead of taking a loan and making the deposit, it is an out-of-pocket charge that you make. Home down payment is a crucial factor in obtaining your home loans. In general, down payment constitutes a minority percentage of the asset's maximum value.

2. What are banks or lending institutions required to pay home down payment?- In the majority of cases, lending institutions set a minimum cap on home down payments. It serves as a shield of security for the lending institutions. The down payment lowers the lending institution's liability and thereby increases the probability of retrieving the balance when the default occurs. The higher the cash down payment, the less the lender's risk. In other words, home down payment provides the lender economic cushioning that guarantees the customer's willingness to pay back as a chunk of his funds is still invested in the project. Additionally, lenders must distinguish between a high-risk borrower and a low-risk borrower and agree accordingly on the number of down payments.

Source: Finance Express Website

3. Know the rate of a home down payment in India- The Reserve Bank of India (RBI) recommends that banks and NBFCs grant up to 80 percent of the property's value. That means that the borrower has to account as a home down payment for 20 percent of the asset's cost. The home down payment can be smaller than 20 percent in some situations. Some lenders issue loans as less than 5 percent of the asset value for a home down payments. However, for a home down payment, there is no upper limit i.e. you can pay as much as you want.

4. How many years it takes to save for Indian home down payment- In India, people need to save substantially for a down payment. However, a rise in general income level and access to several sources of credit have made life easier when it comes to buying houses. The value of property in cities like Delhi or Mumbai is colossal in comparison to other metropolitan cities like Kolkata or Bengaluru. So buying a property in Mumbai takes about 12 years for a mid-level income earner while buying a house in Bengaluru and Kolkata takes around 5 years.

Source: HomeCapital Website

5. Home Down Payment Assistance Program for First Time home buyers in India- HomeCapital is India's first Home Down Payment Assistance Program becoming a savior for first time home buyers. Now, you don't need to wait to buy your house for an indefinite time. The plan provides you with an interest-free unsecured loan up to 50 percent of the down payment.

6. Advantages of having home down payment assistance program- HomeCapital has relations with all of India's leading real estate developers as well as with financial institutions. The plan provides you with half the down payment in the form of an unsecured interest-free loan. With no interest in the calculation, the borrower must only repay the principal sum in 12 equal installments. Furthermore, the plan does not hinder the chances of securing a home loan, nor does it suggest a legal claim on the house. It helps home buyers to stop the delays of saving funds to make the down payment on their first house first.

HomeCapital has relations with all of India's leading real estate developers. Use their calculators, you can measure your property's wise eligibility based on your income and credit history, and take the first step towards homeownership.