Tips to Follow, If You are Taking Help from Family for Down Payment
Jan 09, 2018 Home Trading Steps
Buying a home has become easier these days due to easy availability of home loan. And similarly, repayment of the home loan has also become easier due to equated-monthly-instalment (EMI) schemes. However, things do not end here, banks or financial institution funds 80 to 85 percent of the property value as the home loan amount. But what about the rest of the amount which is generally termed as down payment? This highly depends on the saving capability of an individual.
Young buyers in their 20s or 30s do not keep savings as their tops priority. They usually like to invest in gadgets, travelling, socialising or similar other things. Then when family responsibilities come on your shoulder, they plan to purchase a home. And if the buyer does not have any savings then there is a problem. Most commonly the amount of down payment comes from parents or family members. This could be a gift or a loan.
So here are some tips to follow if you are sourcing money from your parents or family.
1.Parents are the easiest source for arranging money and such money often gets unregulated. If used judiciously, it can be of great help. But often financial assistance from family can make you dependent on them and weaken your own financial stronghold. Hence it’s necessary to manage your finances from different sources properly. And parents should also need to understand that the money they are giving is unsecured and cannot expect it back. So they should also lend the money judiciously keeping their future safe as well.
2.If you have a loan then it’s better to go in a legal way. You should not take your parents for granted as they have already spent almost all their earnings on you and after lending money to you they don’t even get interested in lending out. Hence a legal document can be of great help. A parent should also avoid being emotional and give loan amount on legal terms and condition.
3.In India when parents grew old, they usually expect to be staying with their children. So while you live with your parents in your traditional home, you can save for the new one. In this way, you both will stay financially stronger.
4.Parents should not go overboard to help their children while putting themselves at risk. They should think about their retirement plan and should not giveaway their retirement funds or savings. The children are young, they have time to build their home but parents in old age have do not have much time or savings to build their future.
Young buyers in their 20s or 30s do not keep savings as their tops priority. They usually like to invest in gadgets, travelling, socialising or similar other things. Then when family responsibilities come on your shoulder, they plan to purchase a home. And if the buyer does not have any savings then there is a problem. Most commonly the amount of down payment comes from parents or family members. This could be a gift or a loan.
So here are some tips to follow if you are sourcing money from your parents or family.
1.Parents are the easiest source for arranging money and such money often gets unregulated. If used judiciously, it can be of great help. But often financial assistance from family can make you dependent on them and weaken your own financial stronghold. Hence it’s necessary to manage your finances from different sources properly. And parents should also need to understand that the money they are giving is unsecured and cannot expect it back. So they should also lend the money judiciously keeping their future safe as well.
2.If you have a loan then it’s better to go in a legal way. You should not take your parents for granted as they have already spent almost all their earnings on you and after lending money to you they don’t even get interested in lending out. Hence a legal document can be of great help. A parent should also avoid being emotional and give loan amount on legal terms and condition.
3.In India when parents grew old, they usually expect to be staying with their children. So while you live with your parents in your traditional home, you can save for the new one. In this way, you both will stay financially stronger.
4.Parents should not go overboard to help their children while putting themselves at risk. They should think about their retirement plan and should not giveaway their retirement funds or savings. The children are young, they have time to build their home but parents in old age have do not have much time or savings to build their future.
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