A key point to consider when buying a home is the more you borrow, the more it will cost you to buy the same home. Typically, your mortgage should be secured with a low interest rate and a monthly payment that fits within your budget. This is where the down payment has to be factored in.
Many intended home buyers have difficulty in getting that initial down payment required to buy the home, enabling them to pay a mortgage instead of wasting their money on rent. Here are 7 easy ways to build the down payment:
Make buying a home your priority and change your spending habits to reflect this. The best way to do this is to create a budget that will serve as your blue print towards making the down payment for your home.
- Pay off your credit card debts. This has a couple of benefits:
– Applying for a mortgage with too much consumer debt will reduce your chances of qualifying for a mortgage
– Paying off your credit card debts will mean less money will be paid towards the interest payments, leaving you with cash to pay for other expenses.
- Buy your groceries and other items using cash. It is harder to spend with cash than with a credit card, and this will ensure you buy less than you normally would if you were using a credit card.
- Increase your level of savings. If you get a bonus from work, don’t spend it, but save it towards your down payment, preferably in a savings account you have created for the down payment. If you get a tax refund, do the same.
- If you are a first time home buyer, you may be eligible for the government’s Home Buyer’s Plan whereby you can borrow from your Registered Retirement Savings Plan (RRSP). You and your spouse or partner are allowed to withdraw up to $35,000 each from your RRSP. This could be a huge help towards the down payment of your home.
- Save money on vacations – if you go on expensive overseas ones, change to local or regional ones that require less money on travel and accommodation.
- Reduce the number of cars. Cars can be a very expensive with monthly insurance, fuel and repairs. By removing one car from your household, thousands of dollars can be potentially saved.
- Reduce your dining out. Cooking at home is less inexpensive and a healthier option. If you do want to visit a restaurant occasionally, consider using coupon sites like Groupon. Take a packed lunch to work everyday instead of buying a meal.
Looking to buy or sell your home? We are the envy of real estate and with our experienced and knowledgeable real estate professionals, will be able to assist you. Please contact us or let’s chat on 604 913 1000.