Homes aren’t cheap. And with a minimum 5% down payment needed to secure a mortgage, saving enough can feel impossible. Saving to buy a home requires discipline and careful budgeting. Here are some tips to help you get started:
1. Set a Goal
Without a target in mind, saving can feel intangible. Setting a clear goal helps you to stay motivated and focused. Look at homes for sale in your area and get an idea of what you would like to be able to afford. You can then determine how much you’ll need to save. For added motivation, give yourself a target date for achieving that savings. This can help curb unnecessary spending while saving up for a down payment.
2. Create a Budget
To budget, you will need to budget (obviously!). Make a detailed list of your income and expenses, so you have a clear idea of what you have to set aside. Track your spending habits and identify where you can cut back. Then allocate a specific amount each month toward saving for a new home.
Pro Tip: Set up an automatic transfer between your chequing and savings accounts on your dedicated payday. This way, you won’t need to remember to manually add the money each month. Plus, when it’s out of sight, it’s usually out of mind, and you’ll be less likely to overspend!
3. Cut Back on Spending
As I mentioned in creating your budget, it’s essential to reassess your spending habits to reduce non-essential spending. Consider meal planning to save on eating out and cut back on entertainment. Before spending, think about whether it is a want or a need.
4. Minimize Debt
By reducing your existing debt, you will free up more money to put toward saving for a new home. Prioritize paying off high-interest loans, like credit cards, and avoid adding new debts while saving. If you want to buy a new home, maybe that new Range Rover will have to wait…
5. Set Aside Rebates & Bonuses
While it may seem tempting to put that climate action incentive payment toward a nice meal or a new gadget, consider the boost it could make in your savings plan. Plan to put tax returns, government payments, and other bonuses throughout the year directly into your savings. This way, you can eliminate the temptation of overspending and put that supplementary income toward saving for a new home.
6. Research Government Programs
The Government of Canada has several ways to help homebuyers—particularly first-time homebuyers—afford a down payment. These include the Home Buyers’ Amount, First Time Home Buyer Incentive, First Home Savings Account, and GST/HST New Housing Rebates. To learn more about these programs and find out if you are eligible, visit their Buying a Home page or talk to your financial advisor.
By following these budgeting tips, saving for a new home can become much more attainable. But it’s important to remember that even with these tips, you must remain patient and persistent. Saving for a down payment takes time, and you have to stay committed to your goal for the long term. Unexpected expenses can happen, and patience is vital to getting through those circumstances. Celebrate the small wins along the way, and remember that every dollar saved is another step closer to owning a home!