You’ve been dreaming about that cozy home with a garden where you can sip tea in the mornings. You’ve worked hard and saved up a hefty amount. But just as you’re about to hand over your savings, a neighbor mentions how he bought his house using a home loan instead of emptying his bank account. This sparks your curiosity. Could there be a better way to secure your dream home without sacrificing your hard-earned savings? Let’s explore how leveraging debt while keeping your savings invested can be a smart move for you.

The Old School Way: Using Your Savings

Most people believe that the best way to buy a house is by using all their savings. They think paying a huge amount upfront or buying the property outright means they’re debt-free and safe. While that sounds like a good idea, it can actually hold you back from growing your wealth.

Why isn’t this the best approach?

You drain your savings: If you use all your savings, you might be left with little to no money for emergencies or investment opportunities.

Slow growth: Property value generally increases slowly. Meanwhile, other investments, like mutual funds, can give better returns in the same period.

So, what’s the smarter move?

The Smarter Approach: Use a Home Loan and Let Your Savings Grow

Instead of using all your savings to buy a house, you can take a home loan and invest your savings in a mutual fund that offers better returns. It’s like hitting two birds with one stone—owning a house and letting your money grow.

How does this work?

Let’s Break It Down with an Example

You want to buy a house worth ₹1.5 Crores.

You have ₹1.4 Crores in savings.

Step 1: Take a Home Loan You take a home loan of ₹1.4 Crores at 9% interest for 20 years. This means your monthly EMI will be ₹1,25,866.

Step 2: Invest Your Savings in Mutual Funds Instead of using ₹1.4 Crores to buy the house outright, you invest it in a mutual fund that gives an annual return of about 10-12%. Then, set up a Systematic Withdrawal Plan (SWP) so that you can withdraw enough money each month to pay your EMI.

Why is this smart?

Loan Repayment: Over the next 20 years, you’ll pay off the home loan without touching your savings directly.

Your Investment Grows: While you’re paying the loan, your ₹1.4 Crores invested in mutual funds is growing. After 20 years, your mutual fund will have grown to around ₹2.04 Crores approximately.

The Benefits of This Strategy

You Own Your Dream Home: You get to live in your house while paying off the loan little by little.

Your Savings Grow: Instead of using all your savings, you let them grow through investments, which will be worth more in the long run.

Financial Flexibility: By keeping your savings invested, you have liquidity for emergencies and opportunities, all while benefiting from the higher returns on your investment.

Final Takeaway: Grow Your Wealth While Owning Property

Using all your savings to buy a house might feel like the safe option, but it limits your financial growth. By using a home loan and investing your savings in high-return mutual funds, you get the best of both worlds: a house and a growing wealth portfolio. In 20 years, you won’t just own your home—you’ll have a solid financial backup too.

So, next time you think of buying real estate, remember: don’t just use your savings—use debt smartly and let your money grow!

For more smart investment advice, reach out to Home Locator, and we’ll guide you through the best way to own your dream home without sacrificing your financial future!