How to Save Money for Buying a House in India?
A residential property purchase can be easily classified as one of the big-ticket purchases, especially considering the mounting prices of real estate across the nation. Of course, there are numerous Housing Loan alternatives to aid this significant purchase. However, you are still responsible for making a down payment of a minimum of 10% of the market value of the property. Besides, it would require you to shell out for additional expenses such as Registration, Stamp Duty, Property Tax, Legal fee, etc.
At this point, you must note that even if your Home Loan is approved, the lender will only disburse the loan amount, once you have made the down payment, which implies that you have to be personally prepared on the financial front before deciding on to opt for a bank loan.
Best Ways to Save Money for Buying a House
To save enough money to make the down payment towards your home purchase, you ought to plan your finances, such that you maintain the much-needed equilibrium between your savings and your living expenses. Planning your finances efficiently you can build a strong credit rating, and can comfortably obtain a reputable loan such as PNB Home Loan at an attractive interest rate. This will help you buy your dream house effortlessly, without burning a hole in your pocket.
Here are some easy tips to help you conveniently save for home purchase:
Start In Your 20s
When it comes to saving money for investments, the earlier you start, the better it is for you. If you start investing while you are still in your 20s, you can leverage the power of compounding to the maximum extent, thus having sufficient funds by the time you plan to purchase a home. This will help you in making a large down payment, thereby reducing your Home Loan burden.
Your strong financial position will also help the bank to put trust in you and will ensure a swift approval of your Home Loan application.
Invest In Mutual Fund SIPs
In the present day time, it is exceedingly easy to direct a part of your income towards Mutual Fund investments through Systematic Investment Plan. As a matter of fact, you can start investing for your Home Loan down payment as your ultimate goal.
For instance, if you start investing Rs. 15,000 a month in SIP, with a modest return of 12%, you can build a substantial fund of Rs.12.40 lakhs, in a matter of just 5 years. Investing in SIPs is one of the most effective ways to save for down payment with incredible ease.
Invest for your future EMIs
Making the down payment is just the first step towards purchasing your home. Once you acquire a Home Loan, you will be required to pay EMIs for anywhere between 20 to 30 years consistently. Hence, it is imperative that you are financially prepared for such a long commitment.
To help you on this front, you should consider investing in a mutual fund that enables you to generate a return exceeding 1-2% of the interest charged by your lender on loan. Rather than paying out larger EMIs, dividing your finances for investments and EMIs will help you get prepared for future.
Say, interest outgo on your Home Loan is 9% p.a., and a SIP fund aids a return of 11% p.a.Now you can gradually save for your EMIs. This additional amount can then be used to pay off your loan before the end of the tenure, thus helping you save on the overall interest outgo.
You must invest carefully, and if needed seek the expert guidance of a financial advisor before choosing an investment instrument.
Make the most of PMAY- CLSS Benefit
If you, your spouse, or your children (unmarried) do not possess a home anywhere in India, you are eligible to benefit from the Pradhan MantriAwasYojna. Essentially a credit linked subsidy scheme, the PMAY, entitles you to receive a subsidy on the interest paid towards your Home Loan.
The most appealing aspect of this scheme is that the subsidy is transferred to your account on an upfront basis, thereby effectively reducing your Home Loan amount. Consequently, this results in a reduction of the EMI, thus making it easier for you to manage your monthly payments, while still maintaining a reasonable standard of living.
Under this scheme, a subsidy of 6.5% is made available for Home Loans of up to Rs. 6 lakh for people with annual household income, not exceeding Rs. 6 lakh. The subsidy of 4% is available for loan amounts up to Rs. 9 lakh, for applicants with annual household income not exceeding Rs. 12 lakh. Similarly, a subsidy of 3% is available for a loan amount of up to Rs. 12 lakh, for applicants with annual household income not exceeding Rs. 18 lakh.
You must note that the scheme does not offer any subsidy on the loan amounts exceeding the subsidised amounts. Besides, the scheme is only applicable to loans with a maximum repayment tenure of 20 years.
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