The less you spend, the more you can save – this statement rings truest when it comes to preparing for big investments such as buying a house. Every single rupee counts and can amount to a sizable contribution toward owning your very own home!
More and more young Indians are applying for home loans. This signals that it is never too early to start saving for your dream residence. If you are currently working and living with your parents, your expenses are probably pretty low. Even if you live on your own, you could adjust your standards and choose affordable rent that allows you to save more. Being in your early 20s is a great time to begin saving as you aren’t likely to have the added responsibilities and costs that come with being married or having children. You have a real opportunity to get ahead of the game.
That said, saving for a down payment on a home is never easy. In India, the average minimum down payment for a home loan is set at 20%. The average price of a home in India is about 61.5 times an Indian’s average monthly salary. And while this makes starting early all the more important, it can also make the challenge seem all the more daunting.
Fortunately, there’s plenty you can do to make it easier. To get you started, here are our top tips for saving for a house.
While it might be a good idea to start putting a little away each month to get into the habit, your first objective should be to pay off any debts as quickly as possible. This won’t just increase the amount you can save by reducing your interest payments. It’ll also improve your credit score—vital for a good home loan deal.
First-time buyers in India could benefit from subsidies when taking a home loan under affordable housing schemes. Be sure to investigate your options before setting your savings goal.
Remember, your first home is unlikely to be your ideal home. Plus, you’re not just saving for a deposit. You will also need to buy furniture and pay brokerage. So, ensure you set a practical goal—one you can achieve in a realistic timeline and that gets you an affordable home loan with the shortest possible term.
In choosing the amount by trying to find the right balance. You don’t want saving for a deposit to take too long, but you also don’t want to stretch yourself too thin. Take some of the efforts out of calculating your savings monthly by setting up an automatic payment for a specific (and comfortable) amount each payday.
If you’re going to spend less, you need to know what you’re spending on. From Money Manager Expense & Budget to Walnut, there are now more apps than ever to help you do it.
Spending less is one way to have more money to save. Another is to earn more. From taking up more shifts at work to setting up a side home business, there is plenty you can do to boost your income.
If you own any big-ticket items you don’t need, selling them could net you some valuable extra cash. Just be careful not to sell anything you might need in your new home!
Whether it’s a parent, partner or close friend, having someone to hold you accountable is a great hack to avoid slipping into bad habits. Whoever you choose, tell them all about your savings goals and ask them to check in with you regularly to ensure you’re on track and stay motivated.
Saving for a home is a marathon, not a sprint. And, as with any marathon, the trick is to pace yourself. You’re far more likely to give up if you overdo it and make yourself miserable! Instead, don’t work too hard. Don’t sell too many things. And don’t save too much, too soon. The surest way of successfully saving for a down payment is to set modest goals and achieve them consistently. Once you have enough saved for a downpayment, you can steadily inch closer to owning your own home. It will become your biggest asset and financial milestone; remember to protect it by purchasing good home insurance.