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Tips to Save Smartly For Your Dream House
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Buying your dream house is one of those big life milestones that require a lot of planning and saving well in advance. While it may take time, it is worth the wait and work. In order to buy your dream house, it’s first important to save the down payment amount. And here are some tips to help you do that.
1. Set your savings goal
For this, you first need to estimate the budget for your dream home. This will depend on the type of house you want to buy and the area in which you want to buy it. Generally, banks require you to provide 20% of the cost of the home as a down payment. So, if you are looking at houses in the budget of Rs 1 crore to Rs 1.5 crore, you will have to save Rs 20 lakhs to Rs 30 lakhs. Once you have this amount, you can start saving for it.
2. Open a separate savings account
When you have such big-ticket items to save for, it’s always advisable to open a separate savings bank account for them. If you use one bank account for all your expenses and daily transactions and also for saving for your dream house, it may not be the most efficient or effective. Hence, look to open a bank account online or offline. Consider high-interest savings bank accounts in order to earn higher interest on your balance. You can make use of a savings account interest rate calculator to see how much you can earn through your deposits.
3.Automate your investments
If your goal of buying your dream home is more than five to seven years away, it may help to invest a portion of your savings into asset classes such as equity. You can automate your investments in financial products like equity mutual funds through your savings account. This will ensure that your money is regularly being invested in instruments with the potential to earn higher returns.
4. Keep a track of your savings
While you may have set a savings goal with a set amount and timeline at the beginning, it’s important to regularly check if you are on track to meeting this goal. Over time, it may be possible that you weren’t able to save as much as you wanted every month because some emergency expenses came up. If that’s the case, you can try to make up for it by saving whenever you get additional income, say, through a bonus. Such corrective action can only take place if you regularly keep track of your savings account for your dream house.
In addition to these tips, you should also focus on building a good credit score. The interest rate that lenders will offer you on a home loan will significantly depend on your credit score. You can apply for a credit card through your savings bank account and use it to build a credit history. Make sure to pay the credit card bills in full on time to maintain a high credit score.
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