The prospect of buying a home is often exciting, but saving for a down payment can feel overwhelming. With a goal and a plan in mind, you’ll be able to turn your dreams of homeownership into a reality. Here are some tips to help you get started.
6 Ways to Save for a Down Payment
Prioritize and cut back.
If saving to buy a home is a top priority for you, one of the easiest things you can do to save money is to create a budget and cut back on expenses. If you eat out or order take out often, cook at home or bring a lunch to work. Instead of buying new clothes, buy second-hand. If you take an expensive vacation every year, consider a “staycation.”
Focus on reducing debt
Reducing your debt load will not only enable you to contribute more money to your savings, but it will also raise your credit score and lower your debt service ratio, both of which are important when applying for a mortgage.
Open a TFSA
It’s a good idea to have an account specifically for your down payment, and a TFSA is a great option to save money outside of your RRSPs. Your savings will grow tax-free in this account and it’s easy to withdraw when the time comes.
Consider a GIC
Investing in a GIC is a great option if buying a house isn’t in your immediate future. You’ll earn more interest with a GIC, and your money will be locked away for a fixed period, eliminating the temptation to spend it. Learn more about the benefits of investing in a GIC on our blog.
Set up automatic transfers
Setting up an automatic transfer from your chequing account to your savings account every payday will ensure a regular contribution to your down payment.
Think of ways to boost your income
Get a second part-time job, or use your skills to offer services such as online tutoring, or selling handmade items.
Saving for a down payment on a house takes time and commitment, but if you know how much you need to save and have a strategy for how to save it, you will be able to reach your goal.