Know about Down Payment Saving Tips for Renters
Source: HomeCapital
For renters who wish to purchase homes, one of the main issues is how to save for down payment. This can sound like a daunting challenge, but if you prepare correctly, then you can do your homework and break it down into quick steps to follow.
It is necessary to determine how much exactly you are trying to save before you start saving. In most situations, it is best to find 15 percent of the home down payment (though it can range from 5 percent to 20 percent). Then you have the following important questions to answer. How long should I save for down payment? How long will it take me to save for that down payment? Where is the best place to invest my money in to save for the down payment?
Where is the best place to invest my money for down payment savings? By opening a high yield savings account, you could save on that. It would be better to set up an automatic transfer process so that every month money for your home savings is deducted from your salary account. It's also a good idea to build a savings corpus for yourself straight out of the gate, in your early years as a professional. High return on investments such as equity will provide an avenue for savings. You may also take out a loan against a life insurance policy to collect the funds needed.
Once you have a good idea of how much you need to save, be sure to cut back on your expenditure. To this end, the following recommendations should be enforced: you may want to enjoy a special day at home - save by less spending on clothes. Save by deferring that expensive holiday destination to which you would like to go and search for budget or backpacking options, both fun experiences. Cut back on buying food online, and eat more home-made food, which is often safer. Prioritize your future home above other costs like telecommunications, vehicles, etc.
Pause on your retirement savings for a while. This may seem a bit risky but anyway, when you come to think about it, a home is an investment for your retirement. If you want to catch up to your home down payment target, making sure you don't have any other spending targets is smarter. So pausing your retirement savings for a couple of years will help you make sure you can save faster on the down payment.
Tax planning is a very critical step in your path through home down payments. There are numerous tax deductions that you can take advantage of under 80 C and 80 D and, if you use them correctly, it can help you get many tax cuts. You will also guarantee that your tax-savings program complements your financial strategy.
Government-backed subsidies such as Pradhan Mantri Awas Yojana for home loans are also a great benefit to homebuyers. So, it is also necessary to do your research in this regard. Under the scheme, the government will provide a 3 percent to 4.5 percent interest subsidy on the amount of home loan depending on the income group to which one belongs.
Home down payment assistance programs is a boon for renters looking to become homebuyers. This is something that professionals and young home buyers will take to, especially if they are digital solutions. HomeCapital is India’s first home down payment assistance program. The program helps first time home buyers with up to 50% of the down payment through an interest-free unsecured loan. The HomeCapital Program helps to fast track homeownership.
