It is a huge decision to buy a house. When you are taking such a big decision, you need to be well-prepared and take the right path. The first thing to do is to accumulate enough before making any down payment to avoid financial risks. Never take the below listed financial decisions to makeup for the down payment.
1. Do Not Dig Retirement Savings: Easiest option is to deplete retirement funds because most of us feel that a lot of time is still left for retirement. If you are disturbing your retirement savings like Employee Provident Fund (EPF) or the Public Provident Fund (PPF), you are missing the magic of compounding, which ideally works the best when stayed invested for a long time. Never disturb long-term investments, especially retirement savings.
2. Do Not Disturb Kid’s Funds: If you are thinking of depleting your child’s education fund, you are definitely off the track of reaching your goal, as it results in insufficient education corpus. Insufficient education corpus may prompt you to go for an education loan in the future and strain your finances.
3. Avoid Personal Loans: Personal loans are quite expensive. If you are planning to avail a personal loan for your down payment, chances are more for you to get over-burdened with debts. You have to consider two EMI payments every month. One is for home loan and the other one for personal loan. Usually, personal loans cost you annual interest of 15 to 18 percent.
Do not take any financial decision that could disturb the financial security of your family. Do not go for easy ways to make arrangements for down payments. For example surrendering insurance schemes from insurance companies or banks is not a desired option as it can push your family into risk.
Best Way To Raise Down Payment For A House:
A goal-based planning is imperative to reach all the major life’s goals including buying a house. A systematic investment plan (SIP) in mutual funds with a diversified portfolio is the best route to obtain better returns within a stipulated time. Compared to simple savings, investments through right channels help grow your money with good returns, thereby reducing your time to realize your dream.
In conclusion, build a comprehensive financial plan before making any complicated buying decision. A good financial plan is built after analyzing the current financial status, expected expenses, other financial goals, etc. before taking any money decision. For more personal finance advice, approach ArthaYantra – offering personalized financial advice for each individual.
