Investing in a residential space can simply be classified as a big-ticket purchase, especially amid the rise steeply property prices across the country. However, once you plan to invest, the first step is to start initially and save enough funds.
Property purchasing is a lifetime decision that contains hefty investments. Though there are plenty of housing loan replacements to facilitate the purchase, you still need to save enough for the down payment, which is around 15-20 per cent of the home cost. Furthermore, you will also need funds to meet the additional expenses, such as property tax, stamp duty, and registration charges. While purchasing your dream home is an honour, placing funds for it can be a challenging scheme. Experts trust that the trick is to start early, at around the age of 25, so that you are able to save enough to finance the purchase by the end of 7-10 years.
Begin by saving small:
Instead of receiving overwhelmed by the impending down payment goal, start by saving small. Decide when you would like to purchase and how many months away you are from the buy. Simply split the amount you need for your down payment by the number of months you have. If you are scheduling to take a home loan, the rule of thumb is to spend no more than 25 per cent of your net salary towards the loan. Before you decide to invest in real estate, you might need to cut back on expenditures and earn additional income. Further, you can also consider having a sort of payroll savings plan, which means that a certain amount of your consistent pay will go directly into a savings account. Be prepared to rise your savings rate, if wanted.
Invest in profit-earning instruments:
You must invest in many types of money growth instruments in order to collect a corpus of at least Rs 50 lakh over the next ten years. Doing so will allow you to earn a respectable rate of appreciation over the course of that time. Deliberate investing in mutual funds, fixed deposits, public provident funds, or all three (PPF). Mutual funds may enable you to generate returns of between 9 and 15 per cent yearly, depending on the insurance coverage you buy. PPF, on the other hand, gives an interest rate that is roughly 7.1% yearly compounded. The ability to start an account with as little as Rs 100 is the nicest aspect of investing in a PPF.
Try a Systematic Investment Plan (SIP):
A Systematic Investment Plan (SIP) permits an investor to invest a fixed amount in a mutual fund system on a regular basis. When you invest incessantly irrespective of the market conditions, you tend to get more units when the market is low and fewer units when the market is high. This knowingly reduces your overall cost of investment.
Check eligibility under the PMAY-CLSS Scheme:
If you are observing forward to availing of a home loan to finance your purchase, check whether you are qualified for the Credit Linked Subsidy Scheme (CLSS) under the Pradhan Mantri Awas Yojana (PMAY). The scheme covers most of the sections of Indian society, with the economically weaker section (EWS), lower-income group (LIG), and middle-income home purchasers. It gives a subsidy on the interest payable on your home loan, subject to certain conditions. Most prominently, the subsidy is directly moved to your account. This makes it simpler for you to manage the monthly instalments.
Under the scheme, a probable home purchaser with an annual household income between Rs 6 lakh and Rs 12 lakh can avail of a subsidy of four per cent on a credit amount of up to Rs 9 lakh. Likewise, if you are an applicant with an annual household income between Rs 12 lakh and Rs 18 lakh, you can avail of a subsidy of 3% on loan amounts of up to Rs 12 lakh. In case you fit into the EWS section with an annual household income of up to Rs 6 lakh, you can avail of a subsidy of 6.50 per cent on a credit amount of Rs 6 lakh.
Go for a high-yield savings account:
Collecting your funds in a savings account is probably the coolest choice that you can make. However, regular savings account typically come with a low rate of interest and, therefore, give a meagre return on your funds. If you want to earn a higher interest rate associated with your regular account, you can opt for a high-yield savings account.
Before you choose to save, you need to have a fair idea about how much your dream home will cost in future. Furthermore, in order to save right, you must study the market well and perhaps consult an expert to guide you through the process.
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