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If you plan your investment wisely then you can easily plan and arrange the requisite funds needed for your first home.
Buying your first home is an emotional decision and comes with many financial responsibilities. Arranging funds from different sources is no easy feat. Although, home loan can be a ladder to fulfil your dream owning a home, but you have to arrange funds for the down payment, which is a substantial amount. For instance, the property that you have chosen is INR 50 lakhs. Usually, banks may offer 65%-75% of the property cost. Even if the bank offers 80% of the property value then you still have to arrange 20% of the funds i.e. 10 lakhs (20% of INR 50 lakhs) as a token money from your own sources. The home loan will start once all the property papers are approved by the bank and the initial payment is done. Mentioned below are some of the investment funds that can help you arrange funds wisely: http://www.shoprwise.com/buying-your-first-home/
Investing in early stage of your career is not only a wise decision but can help in accumulating wealth for the down payment of the property. There is also an advantage to buy property in early stages of your career as bank can give long payment schedule to pay your home loan i.e. up to 30 years. Therefore, it will help you to reduce your EMI load during the initial years. Also, the power of compounding in your 20s or 30s can help you build a corpus without taking unnecessary risk.
Investing in Mutual Funds
Mutual funds are long-term investments, typically 5-7 years. You should start an SIP in 20s to enjoy the power of compounding. This amount can also help you to pay the down payment. You can achieve a return up to 15%, if the portfolio has been diversified among various schemes offered by mutual funds. For instance, if you are investing INR 16,000 via SIP in equity mutual funds every month and the return is of 15%, then you can accumulate a corpus of INR 9.2 lakhs.
Invest for your future EMIs
Apart from saving for your down payment, you should start paying EMIs as soon as the home loan is started and do not delay as the banks are charging an interest of around up to 8.5% per annum. A wise decision will be to invest in mutual funds, that can give returns up to 10% per annum while keeping your EMIs for longer duration. Use the corpus to prepay your home loan earlier than its actual tenure.
Use PMAY-CLSS benefit
Under the Pradhan Mantri Awas Yojna (PMAY), you or any family member can avail this scheme in the country and will be eligible, if they haven’t bought any home in the past. Under this scheme, you will be entitled to het upfront interest subsidy from the government, that reduces your EMI burden. Another important point to note that you will still qualify for this scheme even if your parents have a home in the country. However, loan over the specified limit is not considered for this benefit.