Most banks today insist on paying about 10% – 20% of the total cost of the property as down payment. This ensures that the buyer of the property has his stake in maintenance of the property and timely payments of installments for ensuring continued ownership (since the loan amount will be lower than the market value of the property).
One should ensure that the down payment for the property is done out of one’s personal savings. In the case, such amount is not available then the options available are to take a Gold Loan or a Personal Loan.
The benefits to the banks for taking down payment are:
- It is an Insurance for the lender, since the borrower runs the risk of losing money paid for a down payment in case of any default on the Loan
- Property maintenance is ensured since the borrower has his stake involved.
- In the case of any market fluctuation, in the value of the property any downward risk is covered to the extent of the down payment (normally 10-20%).
One of the other important factors for determining the percentage of down payment is the age of the building that is being purchased. Older properties require a higher amount of down payment to be made by the borrower.
Leading Home Loan Providers (Click to Apply)
- Axis Bank Home Loan
- ICICI Bank Home Loan
- PNB Home Loan
- HDFC Bank Home Loan
- SBI Home Loan
- CitiBank Home Loan
- Bank of Baroda Home Loan
- Allahabad Bank Home Loan
- BOI Home Loan
- Andhra Bank Home Loan
- Other Banks
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