Purchasing a home counts as one of life’s most important financial decisions. Therefore it demands careful long-term planning. Saving and accumulating funds for the down payment and then some before taking a Home Loan is not an easy task. However, you can keep these pointers in mind to plan the task with some focus.
Conduct Adequate Research
It is important to decide your overall budget and the consequent amount of housing loan you need. Most banks sanction up to 70-90% of the property value for a loan but you need to do the math to see if the resulting EMI and tenure of repayment fits well with your financial plan. Ideally, try to maximize the amount you pay as down payment as paying more up front would mean easier and lighter loan repayments.
Build A Corpus
Property prices are soaring in most cities. Hence, it is recommended that you start building a corpus early so that you accumulate a sizeable amount over a period of time. Give weight to high growth options such as equity. Keep the investment goal of saving for a house separate from your other financial goals such as retirement planning. Channel a certain sum regularly towards the down payment kitty and you’ll be able to save a reasonably hefty sum over time.
Consolidate Your Finances
A few months before you make your actual down-payment, you can shift your funds from equity to safer debt instruments. Depending on the time period you have in hand, you can choose between ultra-short term and short-term bond fund. Once you’re all set, keep a part of your corpus for other related expenses such as registration cost and furnishing.
Above all, don’t empty your bank accounts to buy a house. Always ensure adequate liquidity to help cover for any unexpected financial event that may come your way.