Smart Strategies to Speed Up Your Down Payment Savings!
So you’ve decided to start your journey to home ownership. Buying your first home is a rewarding milestone, but the path to save for the down payment can feel daunting. The good news is with intentional planning, you can become a homeowner faster than you think. Here are some practical strategies you can implement that can help you save up for your first home.
Set a Clear Savings Goal
Before you start saving, it’s important to have an idea of how much you would need for your down payment. Think about what type of property and where you would like to buy your first home. This will give you a range of what your desired first home will cost and how much the down payment will be. With a clear goal, you can create a more detailed and actionable financial plan.
In Ontario, the minimum down payment for a home depends on the purchase price and can range from 5% to 20% of the purchase price. Here is the breakdown:
- Homes $500,000 or less: Minimum down payment is 5% of the purchase price.
- Homes between $500,000 and $999,999: Minimum down payment is 5% on the first $500,000 and 10% on the remaining amount.
- Homes $1,000,000 or more: Minimum down payment is 20% of the purchase price.
Cut Back on Non-Essential Expenses
Take a close look at your monthly expenses and identify areas where you can cut back. Some ways to save include:
- Dining out less and cooking at home
- Canceling unused subscriptions
- Reducing impulse shopping
- Using public transportation instead of driving everywhere
Even small adjustments can add up significantly over time.
Automate Your Savings
Set up automatic transfers from your pay check or checking account to your down payment savings account. By automating this transfer, you can ensure the amount you need to set aside each month gets done.
Extra Income Can Go a Long Way!
Have a side hustle idea? Go for it! Any additional income you can earn, even if small, can go directly towards your down payment fund. Here are some side hustle ideas you can temporarily do to speed up your journey towards buying your first home:
- Driving for a ride share service
- Selling handmade or second-hand items online
- Providing a service based on your skills or expertise
- Taking on extra shifts or a part-time job
Pay Off High-Interest Debt
Reducing credit card debt and other high-interest loans can free up more money for savings. Focus on paying off debts with the highest interest rates first, as this will improve your credit score and help you qualify for better mortgage terms.
Save Your Tax Refund and Bonuses
If you receive a tax refund, child care benefit, work bonus, or unexpected financial windfall, consider putting it directly into your savings account. These lump sums can make a big difference in reaching your goal faster.
Reduce Rent Costs
Rent is typically the largest expense that slows the process of saving. If possible, consider moving to a more affordable rental, getting a roommate, or even temporarily living with family to save money on housing expenses. The money you save on rent can be a significant amount and can go straight into your down payment fund, making the road to home ownership in closer reach.
Be Patient and Stay Motivated!
Saving for a home takes time, but staying consistent and motivated will help you get there. Track your progress, celebrate small milestones, and remind yourself of your goal.
If you or someone you know are on the way to buying their first home, reach out to us today and we would be happy to help you with a strategy plan!.