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Dreaming of a Home? A Savings Plan Could Be the Key to Your Front Door

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Dreaming of a Home? A Savings Plan Could Be the Key to Your Front Door
January 15, 2025

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Owning a house is one of the biggest milestones in life. It’s not just about bricks and mortar—it’s a place to create memories, build a family, and feel truly at home. But let’s face it: houses don’t come cheap. Spending in excess of ₹1 crore is common these days for home buyers in metros. If you are eyeing that perfect home, the question arises—how do you fund it? Instead of immediately jumping to a loan or draining your hard-earned savings, there’s a smarter way. A well-structured savings plan could be the stepping stone to making your dream house a reality.

Wise move: Saving for a house

Buying a house often starts with a significant upfront payment—commonly known as a down payment. Depending on the property value, this can amount to several lakhs. Many turn to loans for this purpose, but taking a hefty loan without prior financial preparation can strain your monthly budget. Wouldn’t it be better to have a cushion in place?

A savings plan allows you to approach your dream house goal with stability. By building funds over time, you reduce your dependence on borrowing and avoid dipping into liquid savings meant for emergencies or other needs. The peace of mind that comes with having a solid plan in place is priceless.

Role of a savings plan in home ownership

A dedicated savings plan works like a trusted partner in your journey toward buying a house. Here’s how it helps.

  • Building discipline - When you commit to a savings plan, you’re setting a clear intention for your money. It creates financial discipline by ensuring that a portion of your income goes towards your goal every month. This structured approach prevents impulse spending and keeps your dream alive.
  • Earning returns - Savings plans often come with the added benefit of returns. Unlike regular savings accounts, plans offered by life insurers provide growth on your investments. Over time, this growth can compound, helping you accumulate a larger corpus.
  • Protection along the way - Life is unpredictable, and unforeseen circumstances can derail even the best-laid plans. Many savings plans offered by insurers come with a life cover. This means that in case of an unfortunate event, your family will still have the financial security to pursue dreams like owning their dream home.
  • Flexibility for your needs - Most savings plans allow you to withdraw partial amounts after a certain period. This flexibility can come in handy. Imagine you need to make staggered payments for your house, and this amount can be a godsend.

Steps to save for your dream home

Now that we’ve established the importance of a savings plan, let’s break down how to get started.

1. Define your target

How much will your dream house cost? Research the property market to understand current rates. Let’s say you’re aiming for a home worth ₹1.25 crore. Typically, the down payment required is 20%—that’s ₹25 lakh. Once you have a target figure, you can plan accordingly.

2. Set a timeline

When do you plan to buy your house? If it’s five years down the line, you’ll need to divide your target amount by the months you have left. For instance, saving ₹25 lakh in five years would require setting aside around ₹41,700 monthly (excluding returns on investment).

3. Choose the right savings plan

Not all savings plans are created equal, and selecting the right one depends on your goals and risk appetite. Plans offering guaranteed returns provide stability and predictability, ideal for risk-averse individuals. Conversely, market-linked plansmay offer higher growth potential by investing in equities or debt instruments, suitable for longer timelines.

4. Automate your savings

The easiest way to stay consistent is to automate your premiums. Set up a direct debit from your account. This way, your money goes straight into your insurance savings plan without any delays or second thoughts.

5. Review and adjust

Life situations can change, and so can your financial priorities. Periodically review your savings plan to ensure it’s on track. If you get a bonus or a salary hike, consider increasing your contributions to speed up your progress.

Savings Plan vs. Liquid Savings

You may wonder—why not use your existing savings instead of starting a new plan? While it’s tempting, relying solely on your liquid savings may leave you financially vulnerable. We will explain how.

Firstly, liquid savings are meant for immediate needs, like medical emergencies or unforeseen expenses. Depleting them could leave you unprepared for life’s surprises. Yes, the 12-month worth of liquid savings looks good, but using it for other purposes defeats the original intent.

Savings in a bank account may not earn significant interest (usually 3-4% per annum). A savings plan, on the other hand, provides the potential for higher returns over time and can even be more than inflation rate if you play your cards right.

It’s easier to dip into regular savings for non-essential expenses. A dedicated plan keeps you focussed on your ultimate goal. In this game, being disciplined is half the job done.

Insurance-based savings plans can help buy a house

There are many savings plans out there. However, those offered by life insurers like HDFC Life provide unique benefits that set them apart.

  • Guaranteed1 payouts: Some plans ensure that you receive a fixed amount at maturity, making it easier to predict your progress.
  • Life cover: Alongside helping you save, these plans offer financial protection to your loved ones.
  • Tax benefits2: It’s worth mentioning that savings plans may offer added financial advantages such tax sops on premium payments and the maturity corpus could also be tax-free if certain conditions are met.

By choosing the right insurance-linked savings plan, you’re not only saving for your dream house but also safeguarding your family’s future.

Final thoughts

While the path to home ownership varies for everyone, one thing is clear: planning is crucial. A savings plan gives you the time, structure, and financial growth needed to make your dream house achievable. It’s about building a strong foundation so that when the opportunity arises, you’re ready to take the leap.

Your dream home is more than just a place to live—it’s a symbol of your hard work and aspirations. With the right savings strategy, you can turn that dream into a beautiful reality. 

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ARN: ED/01/25/20139

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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