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How to Save for Your Dream Home with a Savings Account
Posted on Wednesday, June 26th, 2024 | By IndusInd Bank
A home is where the heart is, goes the saying. Having your own home is not just about having a roof over your head. It is also about creating a space that reflects your hard work, values, and aspirations. While renting a house may be an option, the feeling of owning a home is something else.
Hence, careful planning before you buy your dream home is highly crucial. You can employ various financial instruments and strategies to achieve this goal. Let’s look at some actionable and practical tips on how to save for a home and the role a savings account can play in the process.
1. Buy through the right channel
When you plan to buy a house, it is crucial to consider the channel you buy it from. You can buy it through a real estate agent or via the realtor. If you purchase it via an agent, the overall cost can be high due to the agent’s commission. If possible, buy directly from the realtor to save on commissions. It will also help you save money in the long run, which you can direct towards other purposes.
2. Plan the downpayment wisely
A preferred way to fund the cost of a new house is to avail a home loan. While the loan will take care of around 80-90% of the cost, the remaining 10-20%, called the downpayment, will have to be borne by you. Also, it is advisable to retain 1-2% of the overall cost as a contingency fund.
Let’s assume your dream home costs around Rs 80 lakhs. The loan might provide around 80% of the cost, i.e., Rs 64-65 lakhs. The rest, Rs 15-16 lakhs, should be paid by you. You can also implement some money-saving tips and save around Rs 2-3 lakhs for managing unexpected emergencies.
3. Create a monthly budget
Having a budget is one of the most common yet crucial money-saving tips. Once you have an amount in mind, you can implement budget strategies to reach that amount. Here are some ways you can go about it:
a. Begin without delay. The earlier you begin, the more you will save money. You will reach your down payment goal faster.
b. Have a monthly budget that keeps your income, necessary expenses, investments, lifestyle expenses, and other such factors in mind. Note down any areas, such as unused video app subscriptions, where you can cut back. Even if you can save around Rs 2000 per month on average, it could add up to Rs 24,000 yearly. It can be substantial in the long run.
c. While you must know how to save and keep your saving goal in mind, it is okay to indulge yourself in a few luxuries, occasionally. It can help you have a more positive, sustainable relationship with money.
4. Open a separate savings account
Simply knowing how to start saving money may not be enough. You need to ensure you direct the saved money into an account which helps it grow steadily. For this purpose, you can open a savings account offering good interest rates.
Also Read: A Quick Guide to High-Yield Savings Accounts
Over the years, you can keep depositing money into this savings account as savings and allow it to accrue interest.
With IndusInd Bank, you can open a savings account instantly. The process is paperless and completely digital. All you need to do is enter your phone number (which can also be your account number). Next, you can enter relevant details, such as your personal information and PAN/Aadhaar details, and complete your KYC over a video call. Once you have opened your online bank account via this process, you can start depositing money into it.
With time, the money will accrue interest and help you save for your dream home. So, what are you waiting for? Take the first step towards saving for your dream home with IndusInd Bank!
Disclaimer: The information provided in this article is generic and for informational purposes only. It is not a substitute for specific advice in your circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for making any financial decisions based on the contents and information.
