All about the down payment: Home buying

Q: After selecting projects, first step while buying property is down payment. I want to know more about down payment...

Wasim Mohammad, Pune

8th July 2015

Investment Advice in Pune

residential real estate

pune residential market

down payment

payment methods

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Replies (6)

Hi Vinay, The system of down payment exists because of the following reason---

1. It indicates borrower's credit worthiness due to access to the down payment.
2. The amount of real investment a borrower has in their purchase and their truth in continuing to make payments regularly are linked.
3. It acts as a sort of insurance for lenders, since borrowers know that if they default on their loan; they will not only lose the property but their down payment as well.

Rohit Marathi, Pune

10th July 2015

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Absolutely agree with all point but I was wondering what is the reason to introduced down payment?

Vinay Sharma, Pune

10th July 2015

Comment

Hi, Some Banks offer zero down payment loans based on good credit history. Typically, zero-down-payment loans are offered for smaller homes and are hard-to-get and hard-to-qualify.

zero down payments mean that you are borrowing more, making your monthly installments higher and defaulting on even a single payment might initiate foreclosure proceedings against you.

Saurav Mishra, Pune

9th July 2015

Comment

Hi all, I want to add few more point in this regards, Down payments normally do not include costs such as property taxes, registration charges, transfer charges and stamp duty costs. Most banks include these costs in the total loan amount.

Deepti Baragur, Pune

9th July 2015

Comment

Hi Ramdas, As such there is no upper limit to the amount you can pay as down payment.It all depends on how much cash you can manage to set aside. The more you are able to pay as down payment, the lesser is the amount of loan taken from a bank, resulting in easier monthly payments or shorter loan tenure.Normally Builder asked for 20 % of the total amount as a down payment.

ujwal nikam, Pune

8th July 2015

Comment

@ Ujwal, I read your blog. This is really very interesting I just want to know what is the Zero-down payment? I have heard somewhere that bank are offering Zero down payment option..

Ramdas Palsule, Pune

8th July 2015

Hi, as per my knowledge down payment is the difference between the purchase price of a property and the mortgage loan amount. It underlines the buyers commitment to complete the deal and indicates the buyers fidelity in making the loan payments.Normally, banks do not offer a 100 percent loan

Abhijit Pawar, Pune

8th July 2015

Comment

Hi Abhijit I think you are right, buying a home is one of the dreams for all most every person.Normally, down payments range from 15 per cent to 20 per cent of the total value of the property.

ujwal nikam, Pune

8th July 2015

Hi Ujwal, What is the upper limit of the down payment while buying property?

Ramdas Palsule, Pune

8th July 2015