From time immemorial, owning a home has been a staple dream for many Indians! After all, who fancies living in rented apartments and changing places every two-three years. However, as exciting as it may be, buying a home requires a hefty financial commitment, especially if you’re looking to finance it through a home loan.

Making a down payment is one way to make the loans more bearable. By putting down a sizable amount, you can significantly bring down the EMIs and reduce the financial burden.

Even so, a home loan down payment can burn a big hole in your savings. That’s why many experts suggest getting a personal loan to cover the down payment amount. But is it a good idea? Let’s find out.

Loan for Down Payment – Pros and Cons

There are many advantages to using a loan for home loan down payment. For starters, you won’t have to exhaust your entire financial cover. Even so, a second loan comes with its own set of challenges. So, let’s take a look at the pros and cons of a down payment loan.

Pro #1 – Quick approval and disbursal

Personal loans have easy-to-meet eligibility criteria, so making a loan application, approval, and disbursal will be a walk in the park. All you have to do is verify your income, employment status and have a good credit score.

If you fulfil all the criteria, you can get a personal loan approved within 24 hours only.

Additional Read: Best Tips to Plan Your Down Payment for Home Loan

Pro #2 – Flexible repayment

Personal loans allow you to choose a tenure based on your repayment capacity. While the tenure usually ranges between 12-60 months, you can select a period that suits your monthly obligations and repay the EMIs comfortably. 

Pro #3 – No collateral

Since personal loans are unsecured, you don’t have to arrange for collateral. Instead, you can get a loan based solely on your creditworthiness.

Con #1 – Having a high credit score

Since you already have a housing loan on your credit report, you need a substantially high credit score to qualify for a personal loan. Therefore, it’s recommended to build your credit score before applying for either loan. Timely repayment of your EMIs and credit card bills can help you do that.

Con #2 – Relatively high interest rates

Since personal loans are unsecured, lenders usually charge comparatively higher home loan interest rates than other loans. So, if your DTI (debt-to-income) ratio is already on the higher side with the housing loan, it can get a bit difficult to secure a personal loan.

Additional Read: Home Loan Down Payment Advantages for Women

Parting thoughts

Though it might be tempting to use a loan to pay your down payment, it’s recommended that you weigh all your options before applying for one.

If you’re looking for a housing loan to buy your dream house, Tata Capital has the right option for you. Our housing loans come with numerous benefits like easy home loan eligibility, fast application process and disbursals, and competitive interest rates, leaving little to be desired.

Use our home loan EMI calculator today and kickstart your loan planning!

0 CommentsClose Comments

Leave a comment

To know more about Terms & Conditions, click here.


This communication is provided for general information only, without regard to any specific objectives, financial situations and needs of any particular person. This communication does not constitute an offer or invitation to avail services and no part of it shall form the basis of or be relied upon in connection with any contract or commitment whatsoever. Nothing in this communication should be considered as an investment or financial advice, nor should this communication be construed as an advice to buy or sell or as a solicitation to buy or sell the securities if any referred to herein. The intent of this communication is not recommendatory in nature. This communication is being supplied to you solely for your information and the same should not be reproduced, redistributed or passed on, directly or indirectly, to any other person, or published or copied, in whole or in part, for any purpose whatsoever.