January 29 2019
Saving for a House: Tips and Tricks
Are you tired of renting? Are you wanting to purchase a home but overwhelmed by saving for the down payment? You are not alone. For many people, the biggest barrier to homeownership is the down payment. Home ownership is an accomplishment and something to be proud of! We believe that you can get your down payment together in even less time than you think! Continue reading for tips and tricks to help you achieve your down payment.
Create a Budget
We are sure you have heard this tip countless times before – creating a budget is key and the first step to successfully saving money! A budget doesn’t mean cutting out all the things that you enjoy in life – it allows you to determine in advance whether you have enough money to cover all your needs. If you can’t afford all of your wants, it allows you to prioritize your spending and focus on the things that are most important to you. See link here for easy ways that you can learn how to budget.
Pay off Debt
It is very difficult or nearly impossible to save money when you are paying high levels of interest each month on debt. The first step to saving is paying off all of your debt. The fastest way to pay off debt is with the “Debt Snowball Method”. To start, you must make a list of all your current debts from the smallest to largest balance. Make the minimum payments on all debts except the smallest one that has a high-interest rate. Pay down this one each month as much as you can. Once this is paid off, take the money that you were paying on that debt and roll it into the next small debt. As you are freeing up the minimum payments from these smaller debts, you will be able to make larger and larger payments. Not only will paying off your debts help you save money, but it will also help you when it comes to applying for a mortgage. If you have too much consumer debt you likely won’t qualify for a mortgage or you won’t qualify for the house that you would like.
Borrow from your RRSP
As a first time home buyer, the RRSP Home Buyer’s Plan lets you withdraw up to $25,000 individually or $50,000 for a couple. The withdrawn amount must be repaid within 15 years, subject to a minimum annual repayment that is 1/15 of the amount withdrawn. Learn more here.
Lower your Expenses
With your budget, closely review what you are spending each month and what you can eliminate or cut down on. By prioritizing, you can determine what is most important to you. If buying a home is at the top of your priorities you may choose to skip your vacation for a year or getting rid of one of your cars. Instead of completely cutting out the activities you enjoy, look for cheaper ways to do things without diminishing your fun.
Set up a Tax-Free Savings Account
The tax-free savings account program (TFSA) allows you to set aside money that won’t be deductible for income tax purposes. So that any amount contributed as well as interest earned will be tax-free. Check out the link here to learn more about yearly contribution limits and more details.
Saving, Saving, Saving!
The easiest and most convenient way to save is by setting up an automatic direct deposit into a savings account. When you get a promotion at work (congrats!) take that extra money and save it in a separate savings account. Try saving any bonuses, extra commissions, tax refunds or special monetary gifts you may receive.
By following any of these steps you will be closer to becoming a homeowner and moving into your new home! Set up an appointment with a financial advisor to figure out the best options for your savings plan.
Ready to buy? Learn more about our home builders and the variety of new homes options they offer in McConachie.