How to buy a home with a low down payment

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How to buy a home with a low down payment

  • Highlights

  • Shop for a flexible lender

  • Maintain a low Fixed Obligations to Income Ratio

  • Ensure that your property has a high value

  • Consider the proportionate release option

Buying a home with a low down payment helps you save money for the time being and gives you a chance to organise your finances better. But, to facilitate this, you must take certain measures. Take a look at the four tactics that you can implement.

Find the right lender:

Lenders usually require you to provide at least 20% of the home purchase price as down payment. But, this is not a rule that is set in stone. There are also several lenders that accept less than 20% as a down payment as long as you pre-qualify for the loan. So, make it a point to negotiate this rate or opt for a lender that doesn’t require you to make a high down payment. Consider taking a Home Loan from Bajaj Finserv and enjoy a host of benefits. Apart from a high loan amount, you can benefit from a nominal rate of interest, 3 EMI holiday and top-up loan.

Ensure that your Fixed Obligations to Income Ratio (FOIR) is low:

The FOIR is a ratio that measures your debt obligations to your income. The lower your debt obligation, the more confident the lender will be in your ability to repay the loan. So, if you don’t have existing debts, or have a low FOIR, the lender will be comfortable with allowing you to pay a low down payment.

6 Things to Remember for First Time Home Buyer

Ensure your property value is high:

When you are borrowing a home loan to purchase a property, it is important for you to ensure that the property’s value matches that of the loan amount that you seek. If your property is in a good location and a well-known developer is backing it, it will give your lender confidence about allowing you to pay a low down payment. This is because the property will match the loan’s value and fetch enough to recover the lender’s interests.

Additional Read: 6 Renovations That Can Boost Your Home's Value

Look at the proportionate release option:

Several lenders offer a proportionate release option. This can help you reduce the burden of making down payments. If you avail proportionate release, you can break the down payment into smaller chunks and pay it over a few months, instead of paying it in a lump sum. The lender releases the loan amount in proportion to the payments that you make. This helps you make the down payment in a hassle-free manner, as you don’t have to pay a huge amount in one go. But, only pick this option if you’re purchasing a new property that is still under construction.

Additional Read: How To Purchase A Home With Zero Down Payment

If you implement these strategies you can buy a home with a low down payment with relative ease. These tactics help you get access to funds quicker, as you don’t have to save or invest to create a corpus for your down payment.

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