Buying your first home in Canada is one of the most important decisions you’ll make. However, it will take some effort, as you’ll need to put at least 5% of the total property cost towards a down payment. If you’re unsure how much that will be for your dream home, then you can use a mortgage qualification calculator to work it out. Saving up this money may seem like a daunting task, but it doesn’t have to be. Here are some easy ways you can start to save up for your down payment.
1. Put something away every month
This is one of the most basic financial principles you can use to help you save for a down payment. Consider your budget and income, and then work out how much you can afford to put away each month. Make this one of the first payments you make when you get your paycheque. Keep it in a separate account from your day-to-day banking account. This will save you from the temptation of spending it.
2. Get rid of the extras
If you are saving for a down payment, then you’ll want to consider how you can change your spending habits. Perhaps you buy yourself a latte each day. Say it costs you $5.00; multiply that by 365 days, which gives you $1,825 that you could be putting towards your home purchase.
3. Pay down your credit cards
Letting your debt hang over your head is not only disheartening, but it’s also expensive. Every month that you let a balance sit on your credit cards, you’ll pay interest fees. Work on paying off your credit card balance, and you’ll start to free up more money each month.
4. Use your retirement money
In Canada, you can borrow some money from your RRSPs to buy a house. Through the Home Buyers Plan, you can use $35,000 of your retirement money for a down payment. However, it is seen as a loan, and you’ll be expected to pay it back over the next 15 years.
5. Join the gig economy
Consider taking on an extra job on the side to earn some more money that you can put towards a down payment. These side hustles can be as simple as tutoring or offering to walk pets in your neighbourhood. You could also earn some extra cash by taking on contract or temp work.
6. Use a TFSA to invest
In Canada, you can put money into a Tax-Free Savings Account (TFSA) and invest it in mutual funds, Guaranteed Investment Certificates (GICs), stocks, bonds, and more. Any interest you earn on these investments will be tax-free, so you can put it towards your down payment plan.
7. Set aside gift money
There may be some occasional gift money that you can set aside throughout the year. This includes money you get for special occasions like your birthday or even bonuses you get from work.
8. Tax refund
If you are among the lucky Canadians to get a tax refund in April, then consider putting all or some of it aside into your down payment fund.
If you are interested in learning more about mortgages, call Northwood Mortgage™ at 888-492-3690 or contact us here.