These days, owning a house pretty much seems like an impossible task due to rising real estate prices, falling wages, and a seemingly all-time low rate of homeownership among millennials. This is especially witnessed in the ongoing Canadian housing climate.
And even if you do decide to opt for a house for yourself along with your family, you’ll need to be liable for high amounts of debt and will need to commit to years of monthly payments. You’ll also have to commit to a large number of savings for a big down payment, which is one of the main reasons most Canadians haven’t opted to become homeowners as of yet as they simply can’t afford one.
Fortunately, with the right strategy at your disposal, it is possible to acquire your dream home no matter where you are in the world, be it Canada, America, the United Kingdom, or anywhere else.
To learn how to save money for a house, just follow the tips that we’ve laid out for you below:
Reduce Unnecessary Expenses
One of the best ways on how to save up for a house and increase your chances of a down payment will require sacrificing unnecessary expenditures. It basically involves reducing your access to small, meaningless purchases that offer you little to no value in your life. Some of the things that you need to hold back on may include premium coffees, eating out, purchasing in-game items from Fortnite, and shopping for other trivial items that you don’t exactly need.
First-time homebuyers are especially surprised about how much they can save up on because they never really gave much thought about how much they spent on the little things that weren’t necessary every month. The more you cut back on unnecessary spending, the better your savings will be every year. In fact, if you play your cards right, you can save up to thousands of dollars over the course of a year.
Pay Your High-Interest Debts off as Quickly as Possible
Why would you want to purchase a house while also dealing with several ongoing debts, that too of higher interest? If you don’t pay those debts off soon, you will be in an even worse financial situation than you already were before. This is especially considering the fact that you’re also going to be dealing with a high mortgage interest rate that comes with the property you’re about to purchase.
Therefore, there’s no other way to deal with this headache than to pay off your high-interest debts so you can save up more on interest. And as soon as you’ve dealt with all of your debts, you can work on saving more towards your potential property’s down payment. After all, this extra bit of money can also pay your mortgage off quicker with higher payments.
The beauty of first-time buyers in Canada is that they are eligible to withdraw as much as $25,000 tax-free from their Home Buyers Plan’s Registered Retirement Savings Plans (RRSPs). The only thing that you need to keep in mind is that the money has to be paid back over the course of 15 years.
This is a challenge especially when you’re purchasing a new house. And once the money is paid back, just bear in mind that you’re not necessarily rebuilding retirement savings and neither are you going to make interest on that money since it’s not invested anymore.
It’s still a great program nonetheless, but we suggest leveraging it with a separate savings program just so you pay back less.
Note: Normally, there are several factors that go into buying a house for the first time other than just saving up for it. Another crucial factor that goes into home buying is the location, which you need to choose wisely. And if that’s the kind of mentality that best applies to you when choosing to live somewhere in the GTA, then Killarney beach homes are the finest choice possible.
Save up on Rent
It should go without saying that real estate rates are pricier in today’s environment, especially in rent, which happens to be one of the biggest monthly expenses around. If you’re serious about homeownership, then you best find a way to save up on rent.
We suggest moving to someplace smaller, with a relatively cheaper rental rate. We also recommend getting a roommate so you can share the monthly expenses with them. Privacy and space will have to be compromised for this option, but just bear in mind that this is only a temporary solution to a permanent one down the line. So all you have to do is be patient and go with the flow for the moment.
Establish Automatic Transfers
Setting up automatic transfers is an excellent solution on how to save for a house fast. You can set this up with your online banking after payday in which a certain amount of cash will be transferred from your checking account to your savings account. After you get accustomed to it, you won’t even have to think about that money ever again.
Tax-free Savings Account
When thinking about where to save money for a house, another great solution would be a tax-free savings account. This account ensures that you get to keep all of the growth you’ve earned on your savings. It’s a great way to help you reach your savings goal faster.
More Tips for First Time Homebuyers