In a recent development the National Housing Bank, the apex level institution for housing in India has proposed that lenders should be allowed to give 90% of the property value as home loan for properties worth Rs 20 lakhs and above. It is also good news for borrowers who are planning to buy a home as it will mean putting forth a smaller amount as down payment. This is as opposed to the earlier norm where lenders were disbursing only 80% of the total value of the property. However, for the potential home owner arranging even 10% of the property value as a down payment is no mean task.

Common wisdom says that the higher the down payment, the better it is for the homeowner for he has a higher equity in the house when he moves into his home. But how does one save for this all important down payment? Here are some tips for you to follow to make this exercise easier:

Follow the 50-30-20 plan

In order to save for the down payment you need financial discipline. One way to do it is following a 50-30-20 budget, where 50% of your take home salary should be kept aside for your fixed costs, 30% for other discretionary costs and 20% should most definitely be put away as savings. It’s not going to be an easy task cutting out on luxuries you could otherwise afford, but it’s definitely worth the effort when you move into your new home.

Consider making big changes to your lifestyle

If you are truly focused and committed towards buying your own home, you need to consider making big changes to your life. One way to do it is to move into a smaller apartment for a while that will save you at least 20% of the money you spend as rent. You could also think of additional sources of income apart from your regular job. Ideally, doing both and living beneath your means of cutting down expenditures such as vacations, entertainment and subscriptions you could do without for at least two to three years will help you save for that down payment on your home.

Monetizing your other assets

If you have plans of buying your own home, you should have ideally saved up for it at least three of four years ahead. However, if you haven’t done so, you can consider monetizing some of your other investments in order to arrange for the down payment. You could either liquidate a fixed deposit or borrow money against a life insurance policy. Depending upon the stipulations of your insurance company, you can borrow up to 85-90% of the surrender value. The interest rate for the same could be in the range of 9-10% and you have the choice either to pay this loan amount at maturity or pay it half yearly. You could also make a partial withdrawal request from your employee provident fund (EPF). These are the best options for garnering money for a down payment on your house.

Under all circumstances you should avoid credit cards or personal loans because of the exorbitant rates of interest they would attract. This in turn would be increasing your debt burden in the long run. At the end of the day you should know that saving for a down payment is quite a difficult task and there is no alternative for financial discipline when it comes to saving up for the same.