Owning a home should be more than just a dream. It’s a responsibility to provide yourself and your family with shelter and security. Yet, we all know that the idea of saving up for years and spending thousands of dollars can be daunting, especially for first-time buyers. Don’t let this hinder you from working towards your dream home!
First things first: Your down payment is a type of payment, often in cash, that represents a percentage of the purchase price. This will be deducted from the total amount of the purchase price. The bigger the down payment, the lower the monthly payment will be.
Here are some helpful tips that may help kick start your savings:
Set your priorities
Like any major life decision or huge purchase, planning and mindset are key. This’ll dictate how you’ll be saving and spending for the foreseeable future.
On the road towards buying a home, start with the money you’ve already acquired. This includes various income streams that bring in revenue each month. From there, you can now see where your money goes and where you can make adjustments to help you meet your financial goals.
Now’s also the time to reconsider your expenses. Ask yourself if you need to buy the latest fashion trends, gadgets, monthly subscriptions, fast food, etc.
If buying a home is your goal, then it’s time to make that your priority. Start by assessing where you can cut expenses, especially the non-essentials. You’ll be surprised at how much money you can save!
Trim and downsize costs
It may seem anti-climactic to think that to be able to afford a home, you’d need to do a lot of self-control since investing in your own home is a symbol of affluence and making it in life. But savvy investors know the value of every dollar and don’t subscribe to the conventional notion of success. They understand that an affluent lifestyle doesn’t always represent success, but rather, a wide investment portfolio does. Renowned investors avoid overspending because they’d rather invest using a cash surplus.
Now that you’ve defined your goals, challenge yourself to save more and spend less. Saving more and spending less go hand-in-hand and have been tested for being stable and financially successful.
Why not set up a separate bank account for your savings to help you compartmentalize and budget your resources more efficiently? You may also need to start redirecting your savings to prepare for your down payment. For instance, if you’re already saving for retirement, you may need to put this on hold temporarily and redirect funds towards the purchase of your home. Once you’ve already bought yourself a home, you could easily reallocate your resources.
Strategize on a down payment amount
After you’ve created the preliminaries: having a proper mindset, prioritizing, and planning how to achieve your financial goals, now you can move on to the specifics of home purchasing.
Recent statistics show that millennial home buyers can’t afford a 20% down payment and can seldom go over 8%. A higher down payment can have a lower mortgage amount, lower monthly payment, or shorter terms.
Be a Diligent Researcher
Help may just be around the corner! Look into government programs that offer assistance for down payments, such as borrowing from your RRSP (Registered Retirement Savings Plan).
Get in touch with the experts
This process could be overwhelming for some, especially for first-timers. The key is to seek guidance from experienced professionals. Daisy Raouph can help provide guidance and clarity to keep you moving towards your goals.