The majority of us harbour the hope that one day we will be able to purchase our very own home. And home loans are what undoubtedly help bring us closer to realising our ambition of owning a home, despite the substantial costs that are typically associated with achieving this goal.
However, because lenders will typically only finance between 75 and 90 percent of the total cost involved, many prospective homebuyers find themselves in a bind when it’s time to make arrangements for the remaining portion, referred to as the downpayment.
So let us provide you with a roadmap to follow in order to accumulate the downpayment for your ICICI Home Loan:
Do’s
Get a quick start through early planning
When you are making plans to buy a home in the near future, the first thing you need to do is start saving money as soon as you can so that you have enough for a down payment. The earlier you begin, the more time your money will have to grow and benefit from the force of compounding, which will result in bigger returns. If you begin investing early, you will have more time to grow your money.
It is vital to choose the suitable investment route according to your risk appetite and investment horizon after taking into consideration the required down payment amount of ICICI Home Loan, based on the property’s valuation, your current income, and any debt repayments that are due. If you need to save up for the downpayment in the next three years, you might want to consider investing in high-yield fixed deposits or debt funds. Hybrid funds are suitable for investment horizons of three to five years, and equity mutual funds are suitable for investment horizons of five years or more usually. When planning, ensure to also estimate the expected EMI amount by using ICICI Home Loan EMI Calculator.
Attempt to make a bigger than minimum margin money payment
Strive to contribute a larger downpayment when you are trying to accumulate your downpayment corpus. Instead of just accumulating the minimum required of 10-25 percent, try to contribute a larger downpayment. This is due to the fact that the more money you put down as a personal contribution, the less money you will need to borrow for the home loan overall, both in terms of the principal amount and any interest that may be charged on it. In addition, reducing the minimum required LTV ratio would increase the likelihood of the loan being approved. But while you’re attempting to save up for a bigger down payment, you shouldn’t put too much strain on your finances or let it get in the way of achieving other key objectives.
Also, if you are unsure how this may be helpful, then check the online ICICI Home Loan EMI Calculator tool by putting different loan amounts. You will see that the lesser the loan amount, the bigger downpayment, and the lower the EMI.
Dont’s
Do not touch investments that have been set aside for vital goals.
Homebuyers frequently make the error of diverting funds from investments that have been set up for other purposes, such as a retirement fund or their children’s college education, in order to cover the cost of the down payment of ICICI Home Loan. They are oblivious to the fact that this would result in not one but two different outcomes on their part. First, in the form of being unable to reach the goals that were established, and second, in the form of being exposed to the prospect of incurring losses while redeeming market-linked assets when market circumstances are negative.
Also Read: 50 Lakh Home Loan EMI
Avoid taking out loans to pay the down payment.
Homebuyers who are unable to save enough money for a down payment frequently resort to taking out loans in order to meet the criteria. These kinds of people don’t seem to understand that borrowing options like a personal loan or a gold loan, despite the fact that they may appear to be an easy and speedy way to acquire the necessary amount of money for a down payment, can actually come with their own individual sets of repercussions as well.
To begin with, firstly, your application for ICICI Home Loan may be rejected if the combined EMIs of your personal loan or gold loan, along with that of the home loan to be taken, push your FOIR beyond this level. This is because lenders typically prefer to lend to borrowers whose debt and other EMI to income ratio remains within a limit of 40-50 percent. If your debt and other EMI to income ratio is higher than this level, your application for a home loan may also be rejected.
And don’t forget that failure to utilise the ICICI Home Loan EMI Calculator tool during downpayment planning can result in rejection of the application if the EMI turns out to be too big for your repayment capacity. Also. Taking on the responsibility of an additional loan in order to obtain a home loan can put a strain on your finances, especially if the need to borrow funds arises in the future, whether it be in the form of a medical emergency or simply in order to fulfil goals such as the purchase of a vehicle. Since the repayment of a home loan is probably the largest financial commitment one makes, it involves high loan amounts and longer tenures stretching up to 20-30 years, taking on the responsibility of an additional loan in order to obtain
Another thing that happens when you apply for a loan is that the lender will get your credit report from the credit bureau. This is what’s known as a “hard enquiry.” When credit bureaus receive inquiries of this nature, they will lower a consumer’s credit score by a few points. Therefore, just like you make sure to use ICICI Home Loan EMI Calculator to get a fair idea about your EMI, remember to not apply for a loan for any purpose when you are already planning to take a big home loan soon. Doing so would result in a decrease in your chances of being approved for a home loan, as lenders will typically either reject borrowers whose credit score does not meet their eligibility criteria or charge those borrowers a higher interest rate.