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Buying a home is like a dream that is inherited by most of us from our families just like genes, habits and in some cases, money. The ultimate goal in life, a sign of having arrived, a boost to your self-confidence or security for your children- owning your own home can be as gratifying as it gets!
And since it is a ‘must-achieve at least once’ kind of a milestone in your life, it becomes a long-term financial goal which requires saving money for the down payment, ensuring future inflow for EMIs and then trying for early-closure of the loan for the remainder of your life. So, how about we make this calculation easy for you?
Firstly, if you are well-versed with the savings options available in our country, you probably have invested in mutual funds already. For the rest of you who are uninitiated, mutual funds are a basket of securities wherein you invest your money to grow, and your money is further invested in organisations across sectors and capitalizations in order to diversify.
For any long-term investment goal, it is advisable to start your investment in equity- oriented mutual fund via Systematic Investment Planning (SIP). This is because equity MF might provide better tax-adjusted returns in the future and SIP diversifies your risk over time and averages out the cost. Now, let us take a hypothetical example of you wanting to buy a house worth 1 Cr, 15 years from now.
|SIP amount||Rate of return*||Rate of Inflation*||Period of investment||Maturity Amount**|
|Rs 25,000||12%||6%||15 years||~0.73 Lakhs|
*Assumed rates (hypothetical) **As per https://sipcalculator.in/result
So, if you invest Rs 25,000 per month till 15 years, you shall accumulate roughly 73% of the house cost for the down payment and consider a loan for the rest of the amount. There can be below two variations in this arrangement-
- You can start a smaller SIP and keep increasing the amount as your income increases
- You aim for a lower down payment or a lower period of investment. We have tried to maximize the down payment to save on the interest you end up paying on the borrowed amount.
At Provident Housing, we appreciate and understand your dreams and the efforts behind them. We plan our houses just like you plan your money to buy them- with careful calculation and a lot of hope! We invite you to be a part of our family.