Do you feel like you are struggling to find the best strategy to save for the down payment? Here is my Top Five Suggestions:
#1: PLAN HOW MUCH YOU NEED TO SAVE
Before you even start saving money for your down payment, it is best to have an idea of what you can spend on your dream home. I recommend using this app:
https://www.dlcapp.ca/app/dmitry-khokhlov
So, let’s say you can buy a $450,000 condo and you are a First Time Home Buyer (FTHB). Therefore you can put down as little as 5% ($22,500) and save on property transfer tax.
#2: SET A TIMEFRAME
Now that you know what you can afford, you must decide on a timeframe for making the goal of a dream home a reality. If we use this example of saving $22,500 as the 5% down payment on a $450,000 home, what timeline would you be comfortable to save that amount? If you’d like to buy your new home within 3 years, make sure to save around $7,500 a year.
#3: SET A BUDGET
With a $7,500 a year goal, that means putting $625 a month away. You may have to cut out a few fancy dinners and forget about five dollar lattes, but it’ll be worth once you get your new home. You can replace it with home-made romantic dinners with your significant other and maybe even buy that coffee maker that you have been thinking to get for a long time …
#4: GET CREATIVE WITH SAVING
Now it is time to open a Down Payment Saving Account (DPSA). Put away $625 that will solely be used for your down payment. It is even better if you set up a fixed amount that can be directly deposited to DPSA every month.
Reduce high interest debt. Any debt definitely stops you from saving. I recommend paying the card with the highest interest rate off first, closing it and moving to pay the next one off.
Put away any unexpected money like bonuses, gifts, lottery winning into your DPSA!!! This strategy can significantly speed up your savings.
It’s also a good idea to get rid of some high-ticket items like an expensive car or a fancy vacation by asking yourself “ Does owing a home mean more to me than this thing I love”. And remember – it is temporary. You can always get that Audi back once you buy your dream home.
#5 MAKE IT FUN
Brake your three year saving goal into shorter terms like three months (i.e. to save $1,875)… Reword yourself at the end of each term to keep the excitement, but don’t brake the bank! It is also fun to encourage your friends to play the same saving goal and celebrate together once you get there!!!
Need more creative ideas how to save money and move into that dream home? Let’s get in touch!
Dmitry Khokhlov – Your Trusted Mortgage Broker
604-916-5534
dmitry@onegoalmortgages.com