Top 4 Ways to Start Saving for Your Dream House

If you dream of being a homeowner someday, you should start saving for it as early as possible. Check out this post for handy tips that can take you closer to this objective.

Being a homeowner is probably the most common dream in India. But with decent homes in metro cities costing lakhs and crores, this is one dream that would require a lot of planning, hard work, and perseverance.

To begin with, you’d need a practical and disciplined savings plan. But how to save for your dream house? Here are a few tips that can help you in this crucial journey-

1. Fix a Timeline

Almost every aspect of your savings plan will depend on when you want to purchase the home. For instance, if you're 25 years old now, you'd mostly purchase a home in the next 8-10 years. On the other hand, if you are 30 and want to make the purchase as early as possible, you'll need a more rigorous saving plan.

Knowing the timeline is critical because it’ll help you understand how much time you have, the amount you should save every month, and even where the savings should be invested to generate inflation-beating returns.

2. Estimate Property Cost

Understanding how to save money to buy a house also has a lot to do with the cost of the property you’d like to purchase. You don’t need the exact figure, and an estimate would do. But don’t forget to consider inflation when estimating the property cost.

A house that costs INR 50 lakh now could easily cost INR 60 – INR 70 lakh or even more after 8-10 years. This is especially true for Tier I and II cities with rapidly growing real estate markets.

3. Search for Buying Programs with Lower Down-Payment

Most people depend on home loans to purchase their dream homes. While you can pay 80%-90% of the property value through the loan, you'd still have to arrange the down payment. Many developers offer low down-payment programs to make it easier for buyers to purchase a home.

Moreover, you can also find some developers offering an EMI option for the down payment as well. Take advantage of such programs to make the down payment more affordable.

4. Start Saving

So, how to save money for your dream house? Here are some options you can consider-

• Look for a High-Interest Savings Account

You should not put your money in risky instruments, especially if your goal is to purchase a home in the next few years. A smarter alternative is a Savings Account with high interest rate from AU Small Finance Bank. It can help you generate excellent returns minus the risks of options like equity.

• Start a SIP

You can now find Mutual Funds for every financial objective, tenure, and risk appetite. You can start a Systematic Investment Plan (SIP) in mutual funds and begin investing with as little as INR 500-INR 1,000 each month. Consult with an investment advisor to build the investment portfolio.

• Reduce Debt

If you’re currently repaying loans like a personal loan or education loan, you should try to close them at the earliest. The loan interest eats into your savings, not allowing you to save as much as you’d like to. Moreover, it is never a good idea to take a home loan when already repaying other loans.

• Work on Your Credit History

As a home loan is a big-ticket loan, it’ll require an excellent credit history. Most lenders prefer applicants with a credit score of 700 and above. Repaying existing loans and clearing credit card dues on time are some effective ways to build your credit score.

• Take Advantage of First-Time Home Buyer Schemes

If you’re about to purchase your first property, you might be eligible for PMAY (Pradhan Mantri Awas Yojana) home loan subsidy. Under this program, selected few eligible beneficiaries can get home loans at subsidized interest rates.

Purchasing a home is one of the biggest achievements in life. While the goal might look challenging, a carefully crafted savings plan can help you achieve it. Make a note of the tips discussed above to start working towards this dream.

Apart from high Savings Account interest rates, AU Small Finance Bank is also an exceptional choice for Home Loans, allowing every Indian to fulfil their dream of being a homeowner.