What is the down payment on a home loan?

Down payment on home loan is the upfront payment you makes to a bank or NBFC such as Bajaj Finserv. According to the RBI rules, lenders in India can only provide 80% of the property value as a home loan for loans above Rs. 30 lakh, while you have to arrange for the balance 20%.

Features and benefits

Following are the features and benefits of down payment on a home loan

  • Reasonable rate of interest
    Reasonable rate of interest

    Starting from 6.65%*, Bajaj Finserv offers applicants an affordable home loan option to fit their finances.

  • Speedy disbursal
    Speedy disbursal

    No more long waits for loan amounts with Bajaj Finserv. Find your sanction amount in your bank account in just 48* hours from approval.

  • Ample sanction amount
    Ample sanction amount

    Bajaj Finserv provides loan amounts as much as Rs. 5 crores, or higher to eligible candidates and even more, to boost your home buying journeys.

  • 5000+ project approved
    5000+ project approved

    Find over 5000+ choices in approved projects and enjoy better home loan terms from Bajaj Finserv.

  • External benchmark linked loans
    External benchmark linked loans

    By opting for the Bajaj Finserv Home Loan linked to an external benchmark, applicants can enjoy reduced EMIs along with favourable market conditions.

  • Digital monitoring
    Digital monitoring

    Now keep a close eye on all your loan developments and EMI schedules through the Bajaj Finserv online platform.

  • Long tenor stretch
    Long tenor stretch

    The Bajaj Finserv home loan tenor stretches up to 30 years allowing borrowers a buffer period to plan out their EMI payments.

  • Zero contact loans
    Zero contact loans

    Experience a truly remote home loan application from anywhere in India by applying Bajaj Finserv online home loans and getting an easy approval.

  • No prepayment and foreclosure charge
    No prepayment and foreclosure charge

    Bajaj Finserv allows you to foreclose the loan or make part-prepayments at no extra costs or prepayment penalty – making way for maximum savings.

  • Loan subsidies
    Loan subsidies

    Avail of the loan subsidies offered under the PMAY scheme, with Bajaj Finserv. Approach us for updated terms and best home loan deals.

Benefits of a higher down payment when taking a home loan

Although you can purchase a house with the minimum home loan down payment, there are several advantages in making a higher down payment.

Property values can fall as well as rise. When the value of the property falls below the outstanding mortgage balance, you may not be able to sell the property. By making a higher down payment, you reduce the likelihood and severity of the price decline that can result in a negative equity situation.

For a conventional home loan, the lender may ask that a private mortgage insurance be added to the monthly payment if you is offering only the minimum down payment for home loan. This can increase the EMI substantially.

Since a large down payment means a smaller home loan amount, it also means the monthly payments or EMIs will be lower for the borrower. A higher down payment also makes it easier for you to pay off the home loan faster.

Additionally, when you offer a higher down payment, you will get a better home loan interest rate and better terms. This may be even more important if you have bad credit. With a higher down payment, you increase the chances of your loan being approved. Lenders treat a higher down payment as an indication of your ability to save money. This increases your creditworthiness.

Also Read: What is own contribution in home loan?