After having attained a secure position in your particular job profile, it is but obvious that you will now be looking for housing solutions to invest your hard-earned money. Opting an house for rent in Bangalore for the rest of your life is not an option; hence, finding your dream apartment becomes all the more crucial.
Even after conducting extensive research and zeroing down on a property of choice, it is not always easy to go ahead with the plan and take possession instantly. After all the decisions and approvals, the first thing required to do is putting down an amount as down payment.
This amount could be as large as 20%, affordable as 10%, or there could be no down payment at all. There are pros and cons of all these options, however, here are some main reasons why putting down a large amount of money could work in your favour, or against it.
The General Pros
Lenders in good books: If you decide to put down 20% of the total cost of the house as down payment and are completely ready to go ahead with the idea, you will surely make your bank a very happy customer. Banks or lenders appreciate this move and are generally more inclined to give such individuals home loans easily.
Moreover, those putting down amounts anything more than 15% are likely to get handsome rates of interest from these organisations. The process of pay-out also quickens, as a lump sum has already been given as token money. This process builds credibility and inspires confidence that you will be able to pay completely for the property in due time.
EMI relaxation: The more money you put down on your mortgage, the less amount of cash will be deducted from your salary every month. You will then be left with more amount of money every month to invest in other ventures and endeavours. This is but a good step towards securing your financial future.
Remember to pay your EMI’s effectively and on time. This will not only relieve you of the stress of pending payments but also get you a higher credit score, which in turn makes getting an emergency loan a piece of cake.
This trend can be followed when buying a house which is expensive. For example, builders in Bangalore are pricing their properties at or above 1 crore. This has been implemented to meet the demands of ‘luxury living’ in that area. Townships like Mayur Springdale in Electronic city, Suchiraa Villas in Jalahalli West, Regency Pinnacle Heights at Manyata Tech Park etc. are being priced above 1 crore.
The General Cons
Savings decline: Making such huge payments in a go requires large reserves of cached savings. 20% of 1 crore is about 20lakhs. Normally, you will have to pay around 30 – 40 lakhs as down payment depending on the complete price of the property. Your pocket will take a hit definitely, so be very sure about your plan before going ahead with this idea.
Obscure future: After having spent such a large sum in a go, not much is left behind in the name of savings. Available cash for emergency investments like buying a car, health issues, etc. declines, which might just leave you in the lurch later on. Moreover, fewer savings also means that you may not be able to invest in another property immediately.
Buying property is a risky business. It is but a challenge which needs to be taken with deliberate consciousness. Whether to make this down payment or not depends on you. Choose wisely and according to your convenience.
Author Bio: Tina Jindal is a professional content writer who works on a variety of topics like employment, real estate, and education. A real estate advisor for 99acres.com, she has been involved with renowned publications as well. You can contact her firstname.lastname@example.org