Looking to Accumulate a Down Payment Corpus for Home Loan? Here’s How Savings Account Can Help

Get Kotak League Platinum Credit Card & earn 8X reward Points on your every spends of Rs.150 across all categories.
Know More
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.
By clicking on the hyper-link, you will be leaving www.kotak.com and entering website operated by other parties. Kotak Mahindra Bank does not control or endorse such websites, and bears no responsibility for them.
At your request, you are being re-directed to a third party site - https://www.billdesk.com/pgmerc/kotakcard/ wherein you can make your payment from a different bank account. Kotak Cards does not guarantee or warrant the accuracy or completeness of the information, materials, services or the reliability of any service, advice, opinion statement or other information displayed or distributed on the third party site. You shall access this site solely for purposes of payment of your bills and you understand and acknowledge that availing of any services offered on the site or any reliance on any opinion, advice, statement, memorandum, or information available on the site shall be at your sole risk. Kotak Cards and its affiliates, subsidiaries, employees, officers, directors and agents, expressly disclaim any liability for any deficiency in the services offered by BilIDesk whose site you are about to access. Neither Kotak Cards nor any of its affiliates nor their directors, officers and employees will be liable to or have any responsibility of any kind for any loss that you incur in the event of any deficiency in the services of BiIIDesk to whom the site belongs, failure or disruption of the site of BilIDesk, or resulting from the act or omission of any other party involved in making this site or the data contained therein available to you, or from any other cause relating to your access to, inability to access, or use of the site or these materials.
Note: Available in select banks only. Kotak Cards reserves the right to add/delete banks without prior notice. © Kotak Mahindra Bank. All rights reserved
By clicking on the hyper-link, you will be leaving www.kotak.com and entering website operated by other parties. Kotak Mahindra Bank does not control or endorse such websites, and bears no responsibility for them.
By clicking on the hyper-link, you will be leaving www.kotak.com and entering website operated by other parties. Kotak Mahindra Bank does not control or endorse such websites, and bears no responsibility for them.
By clicking on the hyper-link, you will be leaving www.kotak.com and entering website operated by other parties. Kotak Mahindra Bank does not control or endorse such websites, and bears no responsibility for them.
By clicking on the hyper-link, you will be leaving www.kotak.com and entering website operated by other parties. Kotak Mahindra Bank does not control or endorse such websites, and bears no responsibility for them.
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 –
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.
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.
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.
Conclusion
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.
You have already rated this article
OK