We understand saving for a down payment on a home is no easy feat. BUT – with a little creativity and the right strategies in place, it is possible to save your down payment faster.
1. Reduce Your Rent
Talk to your parents or in-laws about your future plans and consider moving back home. Of course, you will be paying rent, but it will likely be much more affordable than renting your own place. Alternatively, downsizing one rental level will also help boost your savings (i.e. moving from a two-bedroom to a one-bedroom).
2. Find Ways to Be Frugal
You’ve no doubt heard the standard “skip the daily coffee” and “don’t eat out” cliches, but there are other less obvious ways to find savings in your day-to-day. For example:
Getting rid of one car (or ditch the car entirely, if possible)
Buying generic at the grocery store
Working out at home (instead of paying for a gym membership)
Scrapping landline and cable for your mobile and Netflix
Using a finance app such as Moka (which rounds up your daily purchases and invests your “spare change”)
3. Bank Your Windfalls
Monetary windfalls such as wedding or birthday gifts, inheritances, tax refunds and workplace bonuses should be added to your savings. If you get a raise at work, bank the difference. It may not seem like much at first, but it will add up faster than you think.
4. Use a Tax-Free Savings Account (TFSA)
Now that you’re setting aside some serious savings, we recommend putting your down payment funds into a TFSA. Any money contributed is tax-free, even when it’s withdrawn (meaning you can keep 100% of the interest earned on your savings).
5. Take Advantage of First-Time Home Buyer Programs
As a first-time buyer, you may be able to expedite your down payment savings process with the help of any one of the Government of Canada’s first-time homebuyer programs. These include:
The First-Time Home Buyer Incentive - Finance a portion of your home purchase through the Government of Canada
The RRSP Home Buyer’s Plan - Draw up to $35,000 from your RRSPs to put towards your down payment
The Home Buyer’s Amount - A $5,000 tax credit to help offset the costs of purchasing a home
GST/HST New Housing Rebate – A rebate for part of the GST/HST paid on a new construction home
Did you know: Our first-time buyer services are geared towards helping first-time buyers realize the dream of homeownership. Fill out our fast and easy pre-approval application to get started!
Photo credits: Freepik.com