Planning to buy your dream house in few years? Our Dream House Purchase tool helps you to understand the monthly investment required to achieve this goal.
Take charge of your financial future with our Wealth Planner. Discover the optimal monthly investments required to achieve your goals with ease.
Secure your child's future by taking control of their higher education expenses. Calculate the ideal monthly investments needed to build a sufficient corpus for their brighter tomorrow.
Explore your desired destination with confidence by calculating the recommended monthly savings needed to fund your dream trip. Start investing now and embark on the adventure of a lifetime.
Understand the current value, absolute and annualized year-on-year (CAGR) returns on investments made in any of our products via the Lumpsum, SIP, SWP or STP mode.
SIP brings consistency. SIP with a top-up feature accelerates your investment commitments to achieve financial goals faster.
Calculate the difference in portfolio value over time between starting an SIP immediately and at a later date. Understand the consequences of delaying your investment strategy.
What is a house purchase planner?
A house purchase planner is an online tool that will show you how much you need to save today to buy your dream house in the future. You can input the estimated current cost of your dream house, by when you intend to purchase and expected returns on investment. The calculator will tell you how much you need to save and invest on a monthly basis in order to achieve your aspiration of buying your dream house.
Why should one use a house purchase planner?
Buying a house is a huge financial responsibility because it requires a considerable amount of investment. In India average investors finance their house purchase through home loans. However, you still have to make considerable down-payment for your house and you have to repay your home loan Equal Monthly Instalments (EMIs).
From a financial planning perspective, your EMIs should not exceed a certain percentage of your monthly take-home salary because you have to save and invest for your other important life-stage goals like children’s higher education, children’s marriage, retirement planning etc. If your EMI (as percentage of your monthly take home salary) is too high you may fall short of other financial goals.
With a house purchase planner you can plan your house purchase in such a way that your loan obligation and interest expenses are managed efficiently. Suppose you want to buy a house that costs Rs 1 crore. You make a down payment of Rs 20 lakhs and take Rs 80 lakhs through a 20 year home loan at 10% interest, your monthly EMI will be Rs 77,000. However, if you would have saved on time and invested in a mutual fund scheme to accumulate a corpus of Rs 50 lakhs for down payment by the time you purchase the house, then your loan obligation will be Rs 50 lakhs and your EMI for a 20 year home loan will be Rs 48,000 only.
A house purchase planner helps you assess your current financial situation, savings, income, and expenses, to determine how much you can afford to spend on your house, ultimately leading to a more successful and less stressful house buying experience.
What are the advantages of a house purchase planner?
A house purchase planner can offer several advantages, helping you make informed decisions when buying a house:
• Helps you to understand the monthly investment required to your goal
• A planner can assist in setting a realistic timeline for your house purchase, taking into account your current financial situation e.g. income, expenses, assets, liabilities etc
• By delaying your house purchase by a few years, you will be able to accumulate more savings which can lower your loan requirement or upscale your dream house aspirations e.g. bigger house, better location etc.
• You can factor in price inflation in your investment decision making if you are planning to buy a house after a few years by using our house purchase planner
• You can plan how to save and invest for your down payment and understand how your house purchase fits into your overall financial plan. You can invest through mutual fund SIP to accumulate the required corpus for your dream house.
• You can reduce your interest expenses and have more savings for other important financial goals like retirement planning and wealth creation
How does the DSP house purchase planner works?
The DSP house purchase planner (click here) is user-friendly and suitable for beginners and new investors seeking to achieve their housing goals. To use the calculator effectively, enter the following details following these steps after opening the calculator:
- Enter the current price of the house if you are willing to make outright purchase. If you want to finance your house purchase through a home loan then enter then down payment amount that you desire to make.
- Enter the year in which the target should be achieved. One should choose a realistic timeframe.
- Enter the expected returns from an asset class. This is among the most crucial steps, as an unrealistic input will lead the exercise to be impractical to implement.
The result will consist of two components:
• It will show the monthly investment required to achieve the expected goal.
• The second will be a graph that will showcase the invested amount and the growth in the portfolio value.
There is also the option of switching to an advanced option; this will open two additional input criteria:
• Mention the amount you have today to invest towards buying your dream house.
• Enter the expected inflation during the years when you are investing.
What should one keep in mind while using the house purchase planner?
1. Current value of house: This will be the cost of house if you were making an outright purchase (i.e. without taking a loan). Define your specific goals for buying a house. Know what you want in terms of location, size, and budget. Keep your other financial goals in mind. Do not dip into your emergency savings or retirement planning kitty to fund a fancy house.
2. Current value of house (if you are taking a loan): Enter the down-payment amount you wish to make. The balance cost of the house will be funded by home loan. Determine how much you can comfortably afford, taking into account your income, existing debts, and ongoing expenses. You should not overextend yourself, in financing your house through home loan.
3. When you should buy your house: It depends on your and your family’s plans and aspirations, and your current situation. If you are paying a high amount on rent, then you may feel the need of buying your house as soon as possible. However, you should compare the EMI with the rent you are paying. If the rent is lower than the EMI, which is the usually the case, then you may be better off, delaying your house purchase so that you give your investments more time to grow. You can evaluate different scenarios in our home purchase calculator by increasing the value and the year. Then you can make informed investment decisions.
4. What should be the "Expected Rate of Return": The "expected rate of return" will depend on the type of investments. Different categories of mutual funds have different risk profiles; risk and return are interrelated. You should invest based on your investment tenure and risk appetite. For example, if you want to buy your house after 10 years, equity funds can be suitable investment options. If your investment tenure is 3 to 5 years, you may want to invest in hybrid funds. If your investment tenure is even shorter, then debt funds will be suitable for you. You should consult with your financial advisor if you need help in making investment decisions. You can refer to long term returns of mutual funds from different asset classes / categories to form your return expectations. It is important to refer to long term asset class returns because short term returns can be misleading.
5. What should be the expected “inflation in price”: This depends on the location of the property. In some locations, prices have appreciated rapidly, while in other locations prices have increased moderately or remained stagnant. You may consult real estate brokers to get more insight, but it is very important to do your own research. You may often hear that, in such and such locations, prices have doubled, but over what timeframe? If prices have doubled in 10 years then the inflation rate is about 7%. How much returns you can get from your investment over the same period? Research about property market in your desired location, current values, and potential future developments. You should try to be analytical and make informed investment decisions.
Disclaimer
This tool has been designed for information purposes only. Investor should not consider above as a recommendation for any schemes of DSP Mutual Fund / third party mutual fund schemes. Data captured here is publicly available including information developed in-house. The recipient(s) before acting on any information herein should make his/their own investigation and seek appropriate professional advice. Investors are requested to note that there is no assurance of any returns/capital protection/capital guarantee to the investors in any schemes of DSP Mutual Fund. Past performance may or may not sustain in future and should not be used as a basis for comparison with other investments. The Performance may vary from scheme to scheme and depends upon several factors including load structure, investment framework, AUM, Investment objective, sector diversion, asset allocation & internal risk management parameter. Investor before investing into any kind of mutual fund scheme should read and be aware of scheme specific risk factors including Risk-o-meter of scheme / benchmark, Investment strategy & objective, asset allocation, Load structure, Plan/options available etc. defined in offer documents (Scheme Information Document and Key Information Memorandum) which are available on website. While utmost care has been exercised while preparing this tool, the DSP Asset Managers Private Limited/ DSP mutual Fund nor any person connected does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information.
"All the returns shown are as per the category prescribed in latest AMFI Best practice Guidelines (AMFI BPG) and any such guidelines issued by AMFI from time to time. Category wise calculators used above is to provide conceptual clarity to investors or for educational purposes. Numerical illustrations are being used for SIP / SWP / STP calculators only for the categories to explain the power of compounding. “Past performance may or may not be sustained in future and is not a guarantee of any future returns”. These figures pertain to performance of the categories/situations as prescribed by AMFI by using the compounded annualized growth rate % (CAGR) prescribed against each category/situation and do not in any manner indicate the returns/performance of any of the schemes of the DSP Mutual Fund. Investors are advised to consult their own legal, tax and financial advisors to determine possible tax, legal and other financial implication or consequence of subscribing to any of the units of the schemes of the DSP Mutual Fund. Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
Note: Returns calculated by taking mean of 10-year rolling returns between 01/06/13 and 30/05/23 for various benchmarks. Mean returns are as follows: INR Gold 9.34%; Sensex: 12.64%; Nifty 50: 12.93% and 10-year G-Sec: 7.20%. (This note is as per AMFI BP)"
DSP Mutual Fund is the leading mutual fund investment company in India.
The email address [email protected] has been removed from our mailing list. you will no longer hear from us.
