Top 5 awesome tips to save for a down payment
Want to own your own house? Well, who doesn’t? You may not be looking to buy a house now but eventually you will. Owning a house is a dream of most people but only a lucky few manage to get a home that they really want. You are not alone if you are worried about saving enough money for a down payment. Hopefully, our tips for saving money will help you gather the amount required for the down payment on the flat that you have been eyeing.
Your bank will finance almost 80% cost of the house/flat (in some cases 90%). The balance is down payment that you will have to self finance. This is a substantial amount for a middle class family. For example, If your 2 bedroom kitchen costs Rs. 30 Lakhs, then your bank would finance up to 24 lakhs and the rest 6 lakhs has be self financing.
Home buying is a complex decision especially if you are a first time home buyer. You will need professional help that will help you get the best homes at best price. Enough money in the bank before going out shopping for a house will give you confidence and peace of mind while choosing a home. We are going to share some tips For saving money here that will help you take control of your finances and save for that daunting looking down payment.
1. Track your spending and expenses
OK, we admit this is one of the most boring and clichéd tips for saving money BUT tracking your spending really works. There are a plethora of apps and websites that help you track your spending and keeps a running total of the amounts you spend on specific items or categories.
This process is an eye opener for many. Sometimes we don’t see the obvious until an app tells us!! You will need to cut down on luxuries and divert money towards savings. Finding out where your money goes is the first step in figuring out how to keep more of it in the bank.
2. Invest in Mutual Funds- Don’t be afraid, Research
Do a simple research on the power of compounding or power of compound interest and you will understand why mutual funds are one of the most popular methods of investing these days. India has seen, in the recent times, a sudden spurt in the number of people investing in mutual funds. While there are many things that you need to consider before investing in mutual funds, we recommend that you start a monthly SIP in an equity fund that matches your risk appetite.
Generally, equity funds are the best since they offer you high rates of returns. These funds are also risky because the market fluctuations in these equity funds can be regular affair but over a period of time Mutual Funds usually offer better returns than the Bank FD rates.
Go to a website named valueresearchonline.com and read about Mutual Funds. The end decision is yours but we speak from personal experience-mutual funds offer good returns on investments. There are multiple number of SIP calculators that will help you plan the exact amount of savings, you require each month to reach your down payment in a particular period of time. For example if you are planning to buy a house in 2020, A mutual fund SIP calculator will tell you how much money you need to start saving for your 20% down payment.
This method of investing is not one of the usual tips for saving money but is a method that helps grow your money.