Real Estate. It’s like the Vancouver Special of local conversation. We love to talk about housing prices, whether we’re noting the rising cost of a three-bedroom house on Fraser Street, or quoting the price of a Belmont Avenue mansion.
Instead of forking over your hard-earned dollars every payday to your landlord, dream of how nice it would be to put it down against a mortgage on your own home. Saving up the necessary 5-20% down payment to purchase a place on top of your rent and expenses in a city such as ours may seem daunting, but it is possible if you look for a home that won’t leave you house-poor.
Here are 7 ways to start saving for your first down payment:
1. Battle out a budget
Using a budget calculator, find out what you earn, what you spend, and what you would like to save to create a feasible budget. Allot enough to cover your basic necessities like food, housing, bills, and other costs, so that you know what discretionary income is left over. Once you’ve figured this out, set-up an automatic plan so that a portion of your funds diverts into a separate savings account every payday without having to think about it.
2.Reduce your rent
While you may love your two-bedroom Kitsilano condo, a one-bedroom may suffice as a short-term solution until you can buy your own place. By lowering your shelter costs by downsizing your rental home, the difference in rent will go straight to the bank while you’ll be able to purge unwanted furniture and belongings before you make the move into your newly-purchased home.
3.Take advantage of your RRSPs
As a first-time home buyer, you are entitled to take out $25,000 from your RRSPs to purchase your first home, as long as you pay it back interest-free within 15 years.
4.Park your car indefinitely
If you don’t rely on your car for your work, consider taking the bus, biking, walking, carpooling or signing to a car co-op for your commute and errands. The costs of insurance, gas, and car maintenance can be a nice chunk of change in your bank account.
5.Get smart about your savings
Instead of letting your savings sit there, find ways to earn interest on your savings without assuming high-risk. Whether you want a high-interest savings account, a Term Deposit or a better RRSP plan, the folks down at your local Coast Capital Savings branch will help you get smart about your savings if you schedule a Where You’re At Money Chat.
6.Bust those bad habits
Goodbye triple grande half sweet vanilla non-fat lattes from your local barista. The barista is not your friend even if she spells your name correctly on your cup. The costs of these daily splurges adds up over time. Instead, bust those bad habits by brewing your own dark roast at home, brown bagging your lunch, and even having your after-work cocktail at home. Instead of breaking the bank daily on these indulgences, treat yourself when you meet a financial goal.
7.Make friends at your credit union
These kinds of friends will keep you in-the-know and aware of current offerings like the First Home Helper available at Coast Capital Savings. First-time homebuyers will get a reduced mortgage rate on the 5-year fixed insured rate mortgage. The offer gives you up to $1,000 to invest, a line of credit to help manage the unexpected expenses of being a homeowner, and $500 to help with legal and appraisal fees. Plus, they have useful resources like “A Canadian’s Guide to Money-Smart Living”, published by the Chartered Professional Accountants of Canada, to keep you money savvy in the long term.
The important thing to keep in mind is that savings only happens one dollar at a time. Once you’ve saved enough to turn the key at your own home, you’ll already be savvy enough to save and plan for the next step up in the real estate market.