A guide to the issues faced by first time home buyers and the solutions to them

January 8, 2020 . Home Buyer's Education Series . 10 min read

Buying your first home is a special experience that can hardly be matched by any other. But with the sky-high real estate prices, it is a daunting exercise, especially for first time home buyers. Even with aggressive saving and careful planning, we get nowhere close to gathering enough even for the initial down payment on a new house. Even if you’re eligible for a home loan, it serves to be futile if you cannot come up with the initial down payment. And the expenses don’t end here.

Stamp duty and registration charges for a new home are quite high, but these are rarely taken into consideration by first time home buyers. Then there are the documents that need to be submitted to the bank for a home loan, on time and with proper signatures wherever necessary; all the while ensuring that the down payment is done on time. It seems like you have to jump through a lot of hoops to buy your own home. And yet, the down payment remains the biggest issue. How do you come up with enough down payment to fund your new home?

With down payment assistance of course! HomeCapital understands this crucial issue and steps up with up to 50% of your down payment as an unsecured interest-free personal loan. Add that to your savings and suddenly you have enough to make that all-important down payment! Before we find out what that is, let us take a deeper look at the potential issues that plague first-time home buyers and how they can be possibly avoided.

Issue 1: Not saving enough

This is a common issue that arises due to 3 main reasons:

  1. An ever-changing property market
  2. Changing and evolving buyer expectations
  3. Not accounting for the high stamp duty and registration charges

The property market almost always appreciates and real-estate prices steadily increase. This also inflates the stamp duty and registration charges. Most first-time homebuyers do not have the foresight to plan for this while saving for their homes. Add to this the possibility of home buyers’ changing expectations, and the savings will fall short. Always do your research and factor in various eventualities before you start saving for your home.

Issue 2: Unhealthy CIBIL score

Most people are not even aware that something like a CIBIL score exists. It scores your creditworthiness and is the first thing banks and financial institutions check before granting you any loan. Whenever you take a loan or use a credit card and not repay them back in time, you end up degrading your CIBIL score. If your score gets really bad, you might not be able to take a new loan, which includes a home loan. To maintain a healthy CIBIL score, always pay back your loan and credit card EMIs on time. Preferably, try not to have any other loan running while applying for your home loan. It will increase your chances of getting your home loan sanctioned by manifold.

Issue 3: Not doing enough due diligence

When buying a home and applying for a home loan, there are a couple of due diligence that needs to be done, especially for a first-time home buyer. The first thing to check is the builder’s reputation and their track record of completing projects on time. If your builder promises you the delivery and possession on a certain date, hold them to it. Many-a-times, it so happens that your home loan repayments start and the project gets stalled. This is one of the worst-case scenarios for any home buyer. The second thing you need to check is the reputation of your lending institution. If an offer seems too good to be true, more often than not, it turns out to be a dud.

Issue 4: Not comparing offers from different lenders

This is another classic issue faced by first-time home buyers. In their anxiety to close the deal as quickly as possible, most people simply do not do enough research. Often going with the first offer loan offer they receive; they potentially miss out on some great which could’ve been availed with a little bit of research. Make sure that you check with as many lending institutions as you can before settling on the one that offers you the best repayment terms. You can even compare home loans with easy-to-use online tools that lay it all out in front of you in the simplest possible terms.

Issue 5: Making a small down payment

Most people tend to pay the least amount of down payment as far as possible because it seems like a big upfront cost. In a way this makes sense, but it is far from ideal. In reality, the bigger the down payment you make, the lesser is your long-term financial load. Try to minimise the amount of loan as much as you can and your finances will thank you in the long run. But what if it is simply not possible for you to come up with a substantially large down payment? Which brings us back to down payment assistance.

What is down payment assistance?

At its core, a down payment assistance program addresses a critical issue faced by a first-time home buyer, coming up with the maximum down payment. What it does is it simply finances a part of your down payment with an unsecured loan. As of now, HomeCapital is the first and the only company offering down payment assistance with interest-free credit. With this assistance, you can save money upfront to use it later while furnishing your home. What’s more, HomeCapital has partnered with lending institutions as well as builders to streamline the entire process for you. So, when you visit a builder to book your home, all the necessary formalities are taken care of in one visit.

Features of HomeCapital’s Home Down Payment Assistance Program

  • HomeCapital provides the down payment assistance in the form of an unsecured, interest-free personal loan.
  • The tenure of your HomeCapital loan is 18 months regardless of the amounts involved.
  • You repay the down payment assistance loan before your home loan EMIs start, which does not over-burden you financially.
  • HomeCapital’s repayment plan does not affect your home loan eligibility.
  • There are no hidden charges or lien on the property.

Benefits of HomeCapital’s Home Down Payment Assistance Program

  • With HomeCapital’s down payment assistance, you get to hold on to a big chunk of your money, which is then repaid in installments.
  • When you receive down payment assistance, you can buy your house earlier, without having to wait any further.
  • You can buy the home of your choice when your upfront payment is bolstered by the down payment assistance program.
  • With HomeCapital’s Home Down Payment Assistance Program, you can actually save the money that you would’ve had to pay as interest on any other loan.

Eligibility criteria

There are certain criteria you need to fulfill in order to be a part of this program. You need to hold a steady job with a reputed company and you must satisfy all the credit standards of partnering financial institutions. In addition to your existing financial obligations, financial track record, income levels also play an important role in determining your eligibility criteria. Also, you must have a healthy credit score as it ultimately determines your eligibility for the Down Payment Assistance Program.

So now be hassle-free and buy your dream home, and let us also help you with your down payment requirement.

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