Effective Ways to Arrange Funds for Down Payment before Turning 30

Updated on: 18 Jan 2024 // 4 min read // Home Loans
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Buying a home is a significant financial decision. For a transaction can involve anywhere from Rs 25 lakhs to Rs. 10 crores & more. While you can always rely on a commercial bank or a housing finance company, to finance the deal, the fact remains that you still have to shell out a substantial amount from your pocket.

Each bank or NBFC offers Home Loans up to 70 to 90 % of the value of the loan, the rest 10-30% of the cost needs to be paid as a Home Loan down payment.

This has been made mandatory due to two reasons:

  • Contributing a significant chunk of money towards the cost of the home substantiates your seriousness towards buying the property
  • An upfront investment in the property increases your stake, and therefore warrants greater responsibility towards servicing the Home Loan

Now that you know the importance of making a down payment towards your Home Loan let’s discuss some ways to arrange for this sizeable amount by 30 years of age.

1. Start Early

If you’re still in your teens or early 20s and dream about having your own home by the time you reach the age of 30, the first step would be to start earning as soon as possible. Of course, that doesn’t mean you need to compromise your education or professional training, but the earlier you start, the better are your chances of being able to be eligible for a leading housing loan like HDFC Home Loan and also save for the down payment.

2. Jump Start Your Savings and Investments

If you’re looking forward to purchasing a residential property before you turn 30, you must make sure to start saving and investing the significant chunk of your earnings right from the very beginning of your career. You can either invest in high risk – high return SIPs, which can earn up to 18% returns on your investments. This will help you create a sizeable fund over the years. You can also invest in other short-term schemes that offer good returns.

3. Automate Your Savings

In the initial years of youth, it is easier to spend money rather than saving it. To make sure this doesn’t take your eyes off the goal, automate your savings. Create a separate Savings Account to park money for investments meant to build a corpus for a down payment.

You can also rely on one of the many online platforms that help automate your savings with the click of a button!

4. Find an Additional Source of Income

In the modern-day world of increasing digitization, you can find numerous ways of making some extra money on the side. You can try your hands at freelance writing, website development, coding or graphic designing, or teach an online course. You can also set up an online shop and sell something that is in demand or partner up with one of the e-commerce giants to earn commissions.  Regardless of the way you chose to make this extra money, it will go a long way in easing your financial troubles when you are finally ready to Apply for a Home Loan and need to make the down payment.

5. Sell Some of Your Belongings

Whether it is an old car standing idle for years or some old furniture that you think wouldn’t blend in with your new surroundings, feel free to sell off some of your belongings. With a flurry of sites on the internet that help you sell used things conveniently, this shouldn’t be a problem. You can put aside the earnings from this sale in your down payment fund.

6. Limit Your Lifestyle Expenses

A great way to enhance your savings without taking much effort is by cutting down on your lifestyle expenses. Right from moving into a home with lower rent, to ensuring minimum possible expenditure of utilities, eating out and entertainment can go a long way in increasing your savings at the end of the month. While this may all seem a little cumbersome, the result will be well worth the effort.

7. Loan Against LIC Policy

In case you have a LIC policy, you can avail of a loan against the same. Both LIC, as well as leading commercial banks, readily offer such a loan, Here, you won’t need to cancel or surrender your policy, and will still be able to procure a loan worth 90% of surrender value. While this is a cost-effective option, you should analyse the pros and cons before taking a loan to service another loan.

8. Loan from Employer

In case you are still falling short on funds, you can request your employer to offer you a general-purpose loan. Since it will not entail much documentation and will be quickly processed, it can prove to be instrumental in fulfilling your need even at the last moment.

These are some of the time-tested ways to secure money for the down payment of your first home. So, wait no more, and pave your way towards a home that you can call your own!