Can you use a Personal Loan to make a down payment on a house?

The increased total cost of the property purchase

Personal loans have higher interest rates than secured loans. For this reason, using a personal loan for a down payment can make your total property cost much higher. For example, if you borrow Rs. 7 lakh via a personal loan for 36 months at 12% interest, you will pay Rs. 1.37 lakh extra in interest over the period, making your house purchase more expensive

Personal loan sanction

Check the maximum loan amount the lender will sanction before applying. Since down payments can be quite large, you want a lender who can comfortably provide that amount. With a Bajaj Finserv Personal Loan, you can get funds up to Rs. 55 lakh. Check your eligibility for personal loan using just mobile number and OTP – 100% online process. 

Factors that affect the personal loan sanction

Lenders usually check your CIBIL score and credit history to see if you’re creditworthy. They also consider your repayment ability and existing debt through your debt-to-income ratio. Ideally, keep your ratio below 30% to increase chances of loan approval.

Additional read: Personal loan with bad CIBIL score

Tax implications applicable

Generally, personal loan payments don’t offer tax benefits. However, if you use a personal loan for your home down payment, you may check with a professional whether there can be any tax benefits.

Remember, it’s not practical to buy a house fully with a personal loan because lenders hesitate to give large amounts on unsecured loans. But personal loans can be handy for the down payment, especially with top lenders.

One great option is the Bajaj Finserv Personal Loan. It’s simple to get, offers funds up to Rs. 55 lakh, and suits your needs well. Plus, the Flexi Hybrid Term Loan comes with interest-only EMI option for an initial tenure of up to 2 years. This can help you manage cash flow and keep finances healthy.

Ready to start? Check your pre-approved offer online and get your personalised loan.