Picture this: You have found your ideal flat in a prime location that offers you all the amenities you sought. You are set to seal the deal with your broker and are asked to make a down payment.
Embarking on your journey to owning your own property need not be complicated with jargon related to real estate.
Let us simplify down payments for you.
What is a down payment?
A down payment refers to the initial sum of the amount paid in order to purchase a high-value asset such as property. This amount represents a part of the total purchase price of the property, while the balance amount can be financed via banks, NFBCs (non-banking finance company) or a private lender.
How does the down payment amount affect your loan?
- Higher down payment = Lower EMIs
Making a larger down payment upfront reduces your overall loan amount. This reduces the monthly EMIs you are required to pay offering you greater flexibility with your finances in the future. - Lower interest rate
When you put down a larger down payment, the lender is assured of recovering his loan amount from you in case of defaults in EMIs. This helps build credibility and improves your chances at getting a lower interest rate. - Reduces lender risk
Any lender would be more assured of his chances of recovery of funds from a borrower that makes a large down payment upfront. Hence a higher down payment reduces a lender’s risk while loaning you money. - Improved chances of loan approval
Making a larger down payment showcases your ability and willingness to repay the loan amount. This improves your chances of getting a loan approved from your bank.
How is the down payment amount calculated?
The amount of the down payment depends on the lender and the creditworthiness of the borrower.
This amount typically lies around 10% — 20% of the total loan amount and is determined by the lender.
Conclusion:
Down payments are an effective way to reduce your total loan corpus while facilitating your journey to owning your dream home. Embark on your journey to owning your dream home in the city of your choice with Shapoorji Pallonji, one of the leading players in the Indian real estate market. To know more, visit https://www.joyvillehomes.com/ today.
