Want to buy a property but finding it a bit of a struggle to save for the down payment. Here are 3 great ideas for saving for one:
Note: One thing that hasn't changed over the past few years for mortgage financing is the down payment. It is still only 5% of the purchase price.
Scale down Your Lifestyle
Finding less expensive ways to do the things you enjoy, or foregoing them for a period of time could save you thousands over the course of a year.
Dial down your vacations: Try a stay-cation in your own city or go somewhere close by.
Eat out less: This could mean halving the number of times you eat out over the course of a month or eating at less expensive restaurants. If you bring your own lunch to work every day you could save yourself upwards of a $1,000 a year.
Spend less on hobbies and entertainment: Do you read a lot? Instead of buying books start using the library more often. Do you go to see a lot of movies? Try subscribing to an on-demand video streaming service and watch more movies at home. Do you spend a lot on your hobbies? Spend less this year, or try finding a different hobby for a period of time. Look for small day-to-day ‘luxury’ expenses that you can cut down on – at least until the down payment is saved.
Save More From Work: Make up a spread sheet with all your monthly expenses. Try to set aside a fixed amount from your pay cheque for savings. Even if it’s a small percentage, every dollar will count. If you get a raise at work, allot the difference between your previous salary and your raise for savings.
Pay off your credit card debt: It is difficult to save money when paying substantial interest to someone else. Begin by paying down the smallest high interest loan. Once that has been paid off, take the minimum payment from that debt and use it towards another. This will snowball until all debts have been paid off. If you have numerous outstanding debts you could always inquire about a debt consolidation loan. These loans typically offer a lower interest rate and mean you only have one monthly payment to worry about.
Use a Tax Free Savings Account
Tax Free Savings Accounts are a fantastic way to save money. The money in a TFSA can grow tax free, meaning any income you earn in this account is entirely yours.
Borrow from your RRSP
If you already have some RRSPs you can withdraw up to $25,000 to buy your first home. Though you should be cautious with this method, if the money you took from your RRSP is not repaid with 15 years it will be treated as income. You will thereby have to pay tax on the money you withdrew as if it where income.
At the end of the day saving for something like a home is all about priorities,” says Hankinson. “If saving for a home is a priority then find some areas that you can cut expenses back on. This best way to do this is draft yourself a budget and identity key areas where you think you can save.