If you are looking to meet your dream of owning a home through a home loan, the initial step you must take is to accumulate an adequate down payment for your home loan. A down payment essentially is an upfront amount you must pay when availing a home, the remaining amount is funded by the bank.

Putting a specific amount away clearly requires discipline and some critical thought on the preferable financial instrument that you must opt for to generate reasonable returns. One such prudent financial product is a bank savings account owing to its capital preservation feature and assurance to generate satisfactory returns.

Here are some tips you must consider to accumulate an adequate down payment corpus for your home loan using a savings account –

  • Monthly contribute a predetermined amount in a separate bank savings account

The initial step towards saving for an adequate corpus is to compute the fund you would require. Typically, you are required to pay 20 per cent of the home loan as down payment. This 20 per cent is the amount you require to have in your savings account. Before you begin with your monthly contribution to accumulate a down payment corpus, ensure to open a bank account online or offline just for meeting this goal. Doing so would prevent you from mixing your amount parked for meeting your daily expenses with your down payment corpus. This would even provide you with a clearer picture of your financial standing and how you can improve it.

Note that while accumulating a corpus for your down payment, you must add in an extra Rs 2-3 lakh for unanticipated costs like processing charges, administrative fees, stamping duty, etc., which may be incurred while processing your home loan. Once you have figured out your corpus requirement and a deadline by which you need the fund, you must begin investing. In case you are saving up for the down payment with your spouse or any family member, then you may consider opening a joint savings account or family banking account with Kotak to keep accountability of the savings on a monthly basis.

  • Activate the Kotak ActivMoney facility

To earn a higher return than a savings bank account, you may consider activating the Kotak ActivMoney facility. Here in this facility, on surpassing a preset savings account balance, the excess balance gets automatically transferred to a fixed deposit account. As your excess funds are parked in a fixed deposit account for the time period of your preference, you tend to reach your down payment corpus creation goal faster.

  • Activate SIP equity mode initially and before approaching the goal, transfer the fund to a bank savings account

In case you require accumulating a massive down payment corpus over a span of five years and above, you may consider opting for SIP equity mode initially. Doing so would allow you to generate higher returns as equity has the potential to generate higher returns than fixed income instruments over the long term by a wide margin. However, as equity may be volatile in the short-term period, it is recommended to shift your accumulated corpus into a bank savings account once you are one to two years away from reaching the goal. This would prevent your accumulated corpus from losing out on the gains owing to market volatility.


Ensure to save up an adequate down payment corpus. Doing so would free you from the burden of a heavy home loan and allow you to repay small home loan EMIs conveniently over time without stressing much about your financial stability.

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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.