Buying Your First Home? These Tips and Tricks Will Help You Save for a Down Payment

By Lodha

Unprecedented joy: that is the exact emotion one feels while buying one's first home. However, purchasing your first home is not a walk in the park; it takes meticulous planning and effective financial management. One of the ways to make the entire process smoother is to save up for a down payment and cover a share of the asking price from the get-go. Whether you apply for a home loan or work out an instalment-based payment plan, a down payment helps you reduce future financial strain. If you plan to move into your dream home soon, start saving up for a down payment at the earliest. Here are a few tips and tricks that will help you save up and buy your dream home.

How Can You Save Up for a Down Payment for Your First Home?

As a first-time homebuyer, chances are you are getting involved in a real estate transaction for the first time. As a result, you might not be aware of the little-known hacks that can help you save up for a down payment and move into your home sooner. Here are a few tips you can follow to create a substantial corpus:

The 50-20-30 Rule:

Although every individual's financial position is unique, there are certain general rules that can help you save up. One of the more popular methods to boost savings is following the 50-30-20 budget. Under this method, you must ensure that 50% of your monthly income is spent on fixed costs like rent, utility bills, etc., 30% on discretionary expenses like travel, shopping, etc., and 20% is kept aside as savings.

Lifestyle Change:

While making lifestyle changes can sound intimidating on the face of it, the truth could not be more different. If you want to save up for a home, take time to evaluate your finances and monthly expenses. Doing so can help you pinpoint areas where you are spending unnecessary money. Whether you are paying too much rent or going on too many shopping trips, fancy dinners, or vacations, a few tweaks to your spending can help you save more. You can also look for additional streams of income apart from your primary mode of employment. Cutting down on frivolous expenses and padding up your income will help you increase the amount you save for a down payment.

Monetise Assets:

Three to four years before buying a house is the best time to start saving up for a down payment. However, at times, planning so far ahead can be a bit challenging. If you find yourself in a similar situation, you can opt to monetise your assets. If you have saved a corpus in a Fixed Deposit, you can check if it can be liquidated. You can also apply for a loan against your Fixed Deposit. The same goes for a life insurance policy, too. You can avail of 85-90% of the policy's surrender value as a loan at an interest rate of around 9-10%. If you have invested in an Employee Provident Fund, you can check if partially withdrawing an amount is possible. All these assets can help you source funds for a down payment. However, try to avoid using credit cards or personal loans for a down payment since these come with higher interest rates.

Now that you know how to save for a down payment, you can begin looking for your dream home. And when it comes to quality homes, you cannot go wrong with Lodha. At Lodha, our foundation is built on offering our clientele impeccable construction quality and homes that meet their every need. If you are a first-time homebuyer looking for a comfortable, well-connected, and spacious house, Lodha Acenza in Andheri ticks all the boxes. While Lodha Woods allows you to enjoy the calm and connectivity of Kandivali, Lodha Bellagio offers luxe residential spaces in Powai. From Lodha Amara in Thane to Lodha Estilo in Pune and Lodha Azur in Bangalore, we curate exceptional developments and unparalleled living experiences.