Tips for Saving for your Downpayment

Posted by Melissa Barrett on Monday, June 4th, 2018 at 12:59pm.

When you're planning to buy a home a lot of planning and prep work needs to occur. To help avoid any hiccups along the way, here are some tips to get started and stay on track with your budgeting and savings plan. 

ELIMINATE DEBT

Your debt is obviously working against you. It’s eating up your available funds, and as you pay it lower and lower, and ultimate rid yourself of it – it’s going to improve your credit rating. First thing’s first: Eliminate your debt. Credit Cards, Loans, Lines of Credit etc.

CHECK YOUR CREDIT RATING

With the above, you should know where your credit stands. Check this before you start focusing on your debt, and after you pay your debt off, see the difference this makes, and maintain a strong credit rating. This will help you when it comes time to apply for your mortgage. But note, refrain from checking your credit rating too often – multiple inquiries in a short period of time can affect your rating…it appears as if you’re ‘shopping around’ for new credit sources.

DETERMINE YOUR HOUSING BUDGET

Determine where interest rates are currently at, and what you can realistically afford as a mortgage payment. Keep in mind all of the extra expenses that come along with owning a home: furnishings, utilities costs, water bills, cost of lawn care and supplies, cost of regular household maintenance, property taxes, and having a little set aside as a reserve “in case of emergencies”

PLAN TO SAVE AT LEAST 20% OF YOUR HOME BUDGET

For example: if you’ve determined you can afford a $450,000 home, plan to save approx.. $90,000. But don’t forget additional costs that will come aside from your downpayment: Building Inspection Costs, Closing Costs, Realtor Fees, Land Transfer Taxes, Movers, Etc. This can be anywhere from a couple thousand, to $10,000 in addition to your downpayment.

RE-DETERMINE YOUR CURRENT BUDGET

Get back to basics with your current budget. Determine your current expenses, and figure out if there are any expenses (shopping, getting your nails done, trips, extras that may not be necessities) that can be cut for the time being to allow you to save more. Determine the maximum you can afford to save per month or per paycheque, and stick with it. But be realistic. Don’t squeeze the budget for the sake of saving, and then have to dip into that savings before your next pay comes around.

LOOK FOR CHEAPER WAYS TO DO THINGS

Perhaps you enjoy the luxuries of life, brand names, fancy vacations, expensive cars. For the time being, look for more budget friendly alternatives. You can still live a full and abundant life on a budget, just by being creative with how you do things.

INCREASE YOUR INCOME

Perhaps it’s time to chat with your boss about an increase in your salary. If your job allows it, offer to work extra hours, or pick up a 2nd job temporarily. Have some valuable items that you no longer use or need? Sell them off! You’ll get money from them AND you won’t have to pack them when the time comes to move.

 

Looking for more information to get started? Call 705-444-4949 or reach out through out site today! 

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