A down payment on a home is an investment in your future. In fact, it may be one of the biggest investments you’ll ever make. So what’s the best way to save?
Three tips to save a down payment
1. Keep the money apart from your other savings. That way, you’ll be less likely to spend it.
2. Find a way to grow your money safely. You don’t want to wake up a month before you plan to buy your home and find you have lost money due to a drop in the stock market.
3. If you’re a first-time buyer, you might want to save for a down payment in a Registered Retirement Savings Plan (RRSP). Under the government’s Home Buyer's Plan, you can take up to $25,000 from your RRSP for a down payment on your first home. You won’t pay any tax on the money as long as you pay it back over the next 15 years. You have 2 full years grace period after the year you purchased your home in before you are required to start paying the money back into your RRSP.
What are some safe places to invest while I save for a down payment?
• High-interest savings account
• Guaranteed Investment Certificate (GIC)
• Canada Savings Bond (CSB)
• Money market fund
Remember: It takes time to save up a down payment
You can speed up the process if you invest your money so it will grow. Just don’t take more risk than is comfortable for you.
The above information was taken from an article in the Investor Education section of the Globe & Mail, last updated, Aug. 24th, 2011.
Tony Marchigiano | Mortgage Specialist - Mortgage Sales BC Region, RBC Royal Bank | Royal Bank of Canada | T. 604-505-7109 | F. 778-737-0054