Buying a home is everyone’s dream, but there are many things to take into consideration before you sign the dotted line. Starting from how you plan to invest in your new home purchase to choosing the right home loan, there are million things to think about. Let’s tackle the first requirement: your home down payment.
Investing in a home is big decision. And once the decision has been taken, there is no turning back. You have to go through the entire process, and whether the expenditure is exactly what you had estimated or goes above that—you are in it for the long haul.
The first thing to do is plan for your home down payment. This is the amount that your home loan doesn’t cover and is anywhere between 10% and 20% of the total value of your new home. This can come up to quite a considerable amount. In order to help you save up for it without being hassled, here are 5 tips that will make it easier to make the down payment for your new home.
Following are the tips to save money for home loan down payment:
Plan Ahead and Start Saving
Buying a home is a decision which cannot be taken on the spur of a moment. It needs a lot of thought and planning, and maybe even a discussion with your entire family. Once you have taken the decision of buying a home, it is advisable to start saving right from that moment on.
Be it keeping your savings aside in a savings account, spending on a tight budget or investing in avenues that will give you good returns, you will need to be prudent and wise. If you already have savings, make sure you total them and set them aside along with the new savings you are planning. Being organised and planning ahead is the key to making your home down payment without struggling.
Invest in Mutual Funds
The time we take to make a decision often costs us more than we may think. When it comes to buying a house, plan your purchase with ample time in hand. This means you can work diligently towards your down payment by investing in mutual funds at a good interest. This way, when your mutual fund reaches maturity, you will have the money required for down payment ready, and you can start your application process with confidence.
Additional Read: Mutual Funds Vs Real Estate
Sell Property or a Second Vehicle
Don’t have a lot of time on hand to begin your home loan application and make your down payment? Don’t worry. One way to get access to money that can go towards your down payment is to sell an unused or unoccupied plot of land that you own.
Secondly, if you own a second or third vehicle, this may be the time to sell it and acquire funds for your home down payment. Selling land or a vehicle also has its own procedure and taxes, so make sure you find out all the details before starting the process.
Take a Personal Loan
Another way of securing money for the down payment for buying a home is taking a personal loan. Though interest rates for personal loans are higher, you can usually get access to funds very quickly and don’t have go though a stringent application process. Most lenders have easy online applications and offer flexible repayment options.
Check Whether a Proportionate Release Option is Available
A proportionate release allows you to pay your down payment in small instalments rather than a one-time upfront payment. This payment is made directly to the lender associated with your home’s builder or real estate company, and is only available if your lender and builder have an agreement or understanding.
Once you have paid the down payment in full to the lender, the lender then hands it over to the builder. This makes it easier for first-time homebuyers to fulfil the down payment requirement.
Additional Read: Real Estate Investment Tips for Beginners
These 5 tips to save big for home down payment are sure to come to your aid when you’re planning on buying a home. After all, once you have arranged for this, everything else will fall into place. You can easily apply for a home loan once you have the down payment amount ready, as this makes the process much easier and swifter.