Personal Finance

Here's how smart investment strategy can help in making your dream home a reality

Updated : November 23, 2018 02:19 PM IST

Owning a home is a dream for almost all of us. Many, particularly in urban areas, now opt to buy properties directly. However this comes with its own share of challenges. But how does one overcome these challenges? The answer is-by adapting systematic planning and smart investment strategy.

Here is how one should go about it...

Think first about the down payment

While the cost of buying a new property can seem pretty high, one must not be daunted by this. Instead, rather than focusing on full cost, the individual should be focused on arranging the down payment. This will not be hard as banks are willing to give home loans that constitutes up to 80 percent of the total amount of the property.

In simple words, the first step to your dream house is arranging the amount required for down payment. So if your dream flat costs anywhere around Rs 1 crore, one should begin by arranging the Rs 20 lakh or so needed to make the down payment.

Start early

While the first step may have been taken, there is still a long way to go. The home loan that was availed has to be repaid. It is here that the younger home buyers will have an advantage over others. The EMI load on a person who availed the loan in his 20’s would be way lighter than that on a 40 year old as there will be longer loan tenure.

Make smart investments to repay home loans

Now the question of making EMI payments comes into the picture. Opening an SIP account that will provide money to make the EMI payment will help you to meet this end. A person who consistently invests Rs 10,000 monthly for 10 years will end up investing Rs 12 lakh. If we consider an average of 15 percent annual equity returns, the amount will be around Rs 28 lakh. The same amount will grow to Rs 1.1 crore in just 18 years.

The SIP can not only aid in securing money enough for making down payment in the short term, but also for clearing the loan taken from the bank in the longer run.

(Disclosure: The CNBCTV18.com editorial team does not engage in speculative or active trading in stock markets and follows its Code of Conduct on securities trading and investment. Any investor/ viewer is advised to carry out necessary diligence on their own or through a certified registered financial advisor for investment decisions.)

Here's how smart investment strategy can help in making your dream home a reality

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