20 OCTOBER, 2021

If you are reading this, you might know that a home loan is a convenient means to purchase your dream house. With home loans, you need not wait for years to accumulate enough savings or dig into your pockets to purchase a house. However, while availing a home loan, you must be aware that the lender does not provide loans for the entire cost of the house. You have to pay some amount upfront, which is called the down payment. This down payment is usually 15-20% of the entire house cost, depending on the lender. 

In the absence of adequate funds, it could be challenging to arrange for the down payment. You might look at loans as an option to arrange a home loan down payment. But should you avail another loan for a down payment? Let's find out.

Availing another Loan for Down Payment

If you do not have enough funds, we suggest you avail a personal loan to arrange for the down payment. However, you must ensure that you can repay both loans simultaneously. Here are some pros and cons of availing another loan such as a personal loan for arranging a down payment.


  • Easy availability

Personal loans have minimum documentation and easy eligibility criteria, making them easier to avail. To get the approval of a personal loan, you must have a high credit score and a stable income and job profile. Usually, a personal loan has a quick disbursement schedule reducing your wait time to pay for the down payment. 

  • No collateral

You need not furnish any collateral to get a personal loan. You can get a personal loan solely based on your creditworthiness and income.

  • Ease in repayment

Lenders offer flexible repayment facilities for personal loans. You can choose a tenure in which you can comfortably pay the Equated Monthly Installments (EMI). It would be best to opt for a tenure that helps you pay for your home loan and personal loan comfortably.


  • Debt trap

Having two loans together can push you into a debt trap. You must avail a personal loan for a down payment after ensuring that your income is sufficient to pay the EMIs for both loans timely.

  • High eligibility

While considering the home loan interest rates, you must also look at the interest rates of the other loan. Usually, personal loans have short tenure and high-interest rates. Moreover, availing a personal loan can increase your debt-to-income ratio affecting your home loan eligibility. 

It is mandatory to pay the down payment to get the approval of the home loan. Therefore, you can opt for a personal loan to arrange for a down payment. However, you must assess your existing debts and income to ensure that it fits your budget. Do not borrow money more than you can repay. It would be best to check your affordability with a home loan EMI calculator and then apply for a home loan from Kotak Mahindra Bank.

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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.