Buying a new home takes some planning and some strategic saving; but with a little forethought coupled with consistent action, you can make home buying a reality.
Be aware that you will need at least a 20% down payment of the purchase price of the house to avoid having to use Canadian Mortgage and Housing Corporation (CMHC) for default insurance. However, using default insurance through CMHC allows you to place a down payment of only 5% of the purchase price of the home. Keep in mind that you will pay more on your mortgage by obtaining default insurance.
Below are some tips to help you save money for a down payment on a house:
Take a look at your monthly expenses. Determine what you can realistically afford to put away per month. Once you have determined that amount, open a separate savings account, or a Tax Free Savings Account (TFSA) to help build your savings. Keep in mind that the yearly amount you can put into a TFSA is $7000. The amount can change yearly according to government standards. TFSA also allows for unused contribution room from previous years, as well as any withdrawals you made in the previous year.
Liquidate some unwanted items. Do you have any household items you have been meaning to get rid of? Maybe it’s time to sell them and put that money toward a greater purpose.
Take a look at your monthly expenses and spending habits. Is there anything you can cut back on? Things that aren’t a necessity can easily be cut from monthly spending. This doesn’t mean you never go out for dinner again, but take a look at what can be eliminated, adding that money back into your savings.
Think about a part-time job. If you have the means to do so, look at taking on extra work. If it puts a couple hundred in your house savings, then seriously consider it.
Pay down your debt. Credit cards carry high interest rates and will take your hard earned money that could go toward your house. Pay it off and start putting that money away for your dream home.