Purchasing a house is a strange combination of emotion and monetary concerns. In majority of the cases, the choice of property investment is driven by a strong intent. But without money, intent can hardly do anything. That makes money the most important element for taking a decision to purchase a house.
Because of big investment, housing finance is the go-to option for most of the people when they decide to purchase a house. Banks can’t provide the entire amount as home loan. They generally agree to provide 80% of the total amount required to purchase a property, as a home loan.   Â
As your personal savings may have taken a back seat this year due to increasing cost of living in the country amid high inflation rate, you may not be in the position to pay 20% of the total amount from your own pocket. In such a situation, what are your options?
Borrow from family
The joint family system in India is still going great and family members depend on each other for making a big investment. This provides a young and prospective homebuyer a different stream to borrow money. However, this borrowing should be formalized through a paper trail to keep disagreements, misunderstanding and disputes at bay. Documenting this arrangement is also necessary to claim tax benefits at the time of filing your income tax.
If you get details related to your home loan documented and pay an interest on the same, you could also claim tax deductions under Section 24 of the Income Tax (I-T) Act. You could annually claim Rs. 2 Lakh as deductions under this section.
See also:Â Should you borrow from family members to buy home?
Apply for gold loan
In India, we are emotionally attached to gold, and seldom allow the yellow metal to serve us in the best way possible. Much worse, many of us continue to pay banks to keep our gold jewellery safe in their lockers. Those planning to buy a house can also use their gold assets rather than keeping them in bank lockers. Note, banks can give up to 90% of the value of gold pledged as loans.
Claim your inheritance
Another asset that is often left to hibernate is your share in the ancestral property. In fact, financial planning in India is so poor that it takes much effort and pain to divide the assets left for us by our elders. This is both heart-breaking and makes a little monetary sense.
In case you don’t plan to go back to your ancestral home and claim your share, it would be a good idea to sit with family members and get your share in cash and use the money to buy a property at the place of your choice where you are living and working.
See also:Â Laws of inheritance in India
FAQs
What is a down payment?
Down payment is the amount homebuyers pay to buy a property in case they are opting for a home loan. It is a sum of money given as the first part of a large payment.
How much amount banks can provide as home loan?
Banks typically provide 80% of the property cost as a home loan. The buyer is supposed to arrange the remaining amount from his own savings.
