If you have bought a house recently or looking to buy one, you might have had this experience where the seller of the property will push you to commit by paying a down payment so that he/she will not sell it to someone else. This is a frequent occurrence with newly developed apartments or societies. If you feel that the house is what you are looking for you will go in for the down payment.

Though most builders or sellers will give you time to arrange for a home loan or any other way to pay the money in full, they will look for that commitment from the buyer. This down payment will not be a small amount which is to make sure the buyer commits to the deal.

The buyer might not have the necessary funds to pay this down payment this is where a personal loan can be useful to buy your dream house.

Why a personal loan?

It is not possible to get a home loan on short notice, as the loan amount is huge, banks and NBFCs will take their time to assess the validity of the property and the documents. It will take at least 3 weeks to process the loan and disburse the funds.

The seller cannot wait or hold the property for so long without any deal on hand. That is why you need to look for alternate source of funding which you can get in a short notice.

This is where a personal loan is the best option for down payments.

A personal loan is an unsecured loan which banks usually take very less time to disburse as the amount a person is eligible for is less. Also, if you have a credit card or have a long-standing relationship with a bank they will also approve Insta loans which will be transferred to you account in just 2 minutes.

Disadvantage of a personal loan

There are a couple of disadvantages when applying for a personal loan

1.    High interest rate – The personal loans have high interest rate which ranges between 10% to 30%.


2.    Reduce the chance of other loans – Banks usually don’t give loans to people with active loans or credit card dues.   

Additional Reading: Top 7 Mistakes to Avoid While Taking a Personal Loan

How to mitigate the disadvantage of a personal loan

Negotiate a deal with the seller

If you are a serious buyer, the seller will be willing to negotiate on the down payment ask if you can pay the down payment in instalments with a specific time frame.

Another way is to negotiate a lower down payment which you can manage and pay in a short period so that it does not affect your home loan if you are planning to take one.

Have a good credit score

Having a good credit score can help you get a better deal on loans. This way you can negotiate with your bank to get lower interest rate which you can pay in a very short duration.

How to get lower interest personal loan rates

A personal loan interest rate varies between 10% to 30%. Don’t get scared by seeing the 30% interest rate, the average still stands between 10% and 17%.

This high interest rate can be avoided by having a good credit score. A good credit score is one which is above 750. With banks openly stating that they are willing to shave off interest rates for people with good credit score it’s time you get credit healthy.

Know all about your credit score here.



Finding that dream house which satisfies your every need is very difficult. You must not lose such an opportunity because you were unable to pay the down payment for the home. A personal loan is a great way to get funds in a short notice and pay off quickly.