Need To Make A Down Payment For Your Home? Here Are Some Great Tips.
For many families, coming up with the down payment for a home is usually the hardest part of home ownership. With today’s historic low mortgage rates and escalating home prices, it makes sense to buy rather than rent. Buying a home is one of the best investments you can make in your lifetime.
So here are some tips that will help you accumulate that all important down payment towards your first home:
1-Pay off your credit cards.
Pay off all your debts. Start by paying off the cards with the highest interest rates first. You can’t save money if you are paying hefty interest payments. Start with your smallest high interest debt, and pay it off. Then take the minimum payment from that debt and use it to help you pay off the next small debt that has the highest interest rate. Once you have that one paid off, the two minimum payments that you use to pay for those smaller debts can help you pay off your next debt faster (again choose a small debt with a high interest rate).
You will notice a snowball effect as the minimum payments you are freeing up help you to make larger and larger payments against one debt at a time.
2-Save your raises at work.
When you get a raise at work, don’t use it to upgrade your car or make a purchase like a boat or an RV. Put the money you get from the raise into a separate savings account. Do the same with a bonus or a tax refund.
3-Maximize your TFSA contributions.
Money in a TFSA can grow tax free, so you don’t have to pay income tax on this money as it grows. There are many financial instruments that give you a higher than average rate of return when placed in a TFSA. Consult with a financial planner.
4-Borrow from your RRSP.
You are allowed to withdraw as much as $25,000 from your RRSP to buy your first home. If you don’t have RRSPs, now is the time to start saving as an RRSP is a good way to save money and reduce your taxes at the same time. Remember, you must repay the funds you have withdrawn within 15 years.
5-Learn to look for effective and efficient ways to save money.
If you buy books, borrow from the library instead. If you love movies, rent them or subscribe to a channel like Netflix. Go for vacations closer to home, and maybe go on fewer vacations. Buy clothes from consignment stores where you can get some really good deals. Shop during sales rather than buying at regular price. Many stores get rid of their current stock to make way for the new season at bargain prices. Eat at home more often especially if you have larger families.
6-Make saving for your down payment a priority.
If you are committed to buying a home and lack adequate funds to make the necessary down payment, then you must make saving for this a priority. This means using all of the above tips and sticking to your plan no matter what.
If you are a first time homebuyer planning to buy a home, you need to get an experienced real estate professional to give you sound advice. Our real estate professionals have a wealth of experience and can guide you correctly. Contact us or call us on 604 913 1000.