Do deewaane shahar mein,
Raat mein ya dopahar mein,
Aab o daanaa dhoondhte hain,
Ek aashiyaana dhoondhte hain.
Having your own house, especially in a bustling Indian city, feels nothing short of a dream. It seems like the ultimate adult milestone.
But let’s be real: between soaring property prices and the constant temptation of weekend getaways, brunches and shopping sprees, saving for a house might just seem impossible.
Yet, thousands of young Indians are making it happen. The secret? Making money work for you. Let’s find out how.
First, Figure Out What You Can Afford
Before you start dreaming of that high-rise apartment in the suburbs or a cozy 2BHK, get a sense of what realistically fits within your budget. Dream big, but stay grounded in reality. Property prices vary widely across cities, so do your research. Home affordability calculators (available on most bank websites) can give you a ballpark figure based on your income, savings and existing loans.
Once you have a rough number in mind, factor in the extra costs- registration fees, stamp duty, legal charges, home inspections, and even furnishing expenses. Your budget should accommodate not just the property itself, but everything that comes with it.
Your Savings Game Plan
Saving for a home doesn’t mean cutting back on coffee or skipping that concert; you just need to be more mindful of your expenses. That requires building a structured savings plan. Start by setting aside money for three key expenses:
The Down Payment: Typically 10-25% of the property cost, this is the biggest chunk you’ll need to save upfront.
Home Loan EMIs: Banks cover 75-90% of the property cost, but your eligibility depends on factors like income, existing debt, and credit score. A higher down payment reduces your EMI burden.
Hidden Costs: Expenses like home inspections, furnishing, repairs, and maintenance fees can add up quickly.
Another important move is automating your savings. Set up an auto-transfer to a separate savings account or a Recurring Deposit (RD) to ensure you’re consistently putting money aside without having to think about it.
Tackling Debt and Credit Scores
Since a home loan is almost inevitable, getting your finances in shape beforehand can make a huge difference. The first thing banks check is your credit score (CIBIL score), and anything above 750 increases your chances of securing a lower interest rate, potentially saving you lakhs over the loan tenure.
If your score needs improvement, start by paying your credit card bills on time, even if it’s just the minimum due. Avoid maxing out your credit limit and try to keep your usage below 30% to maintain a healthy credit profile. It’s also a good idea to check your credit report for any errors and get them fixed if you don't want any surprises during the loan approval process.
Lenders also assess your debt-to-income ratio, which means if you have multiple ongoing loans, whether it’s a car loan, personal loan, or education loan, clearing them before applying for a home loan can work in your favour. A lower debt burden not only makes you a less risky borrower but also improves your chances of approval and better loan terms.
Moreover, a recent RBI policy rate cut could be a significant development for first-time homebuyers. A 25 basis points (bps) reduction in the repo rate means banks may lower their interest rates on home loans, which could make monthly EMIs more affordable. For those planning to take a home loan soon, this is a great opportunity to secure a lower rate and reduce the overall cost of borrowing.
The Home You Want is Within Reach
Buying your first home might seem like a long journey, but the sooner you start, the easier its going to be. It’s about making smart financial choices after all. Plan your budget early, build your savings systematically, keep your debt and credit score in check, and let your money grow through the right investments.
And when you finally hold the keys to your own home, every effort will feel worth it.