Financial experts are always talking about how you should have 20 percent to put down on a mortgage. They’re not wrong either. Putting down 20 percent allows you to take out a smaller loan (and in Canada, completely avoid CMHC mortgage insurance). Plus, you won’t be saddled with the fees given to riskier lenders. At the end of the day, the quicker you’re able to pay off your mortgage the quicker you can live out some of your other goals.
Tip #1: Create A Detailed Plan
Goal setting is your friend when you’d like to save up for a down payment. Start by mapping out how much you’d need for a down payment. Then decide how much you’d need to save each month to reach your goal by a specified date. Now you can create a budget – focusing on needs and cutting out wants. Every little bit you can save brings you one step closer to your goal.
Tip #2: Find Another Source Of Income
Take on a second job for a while, perhaps on weekends or a few evenings during the week. Any income from your second job can go straight toward your down payment.
Tip #3: Pay Down Debt
Get rid of any debt you might have. Credit cards are likely the biggest culprits, so why not pay off these bills before you start saving. Doing this you’re able to free up some cash which you can then start putting into a savings account.
Tip #4: Sell Your Unused Items
The best way to get some guaranteed cash is to sell everything you don’t need. Do you really need that second car? What about all the junk in your garage that you haven’t used in years? Go through your possessions and be brutally honest with yourself as to whether you use it. The real question you should be asking is are you willing to forego purchasing a home for some “stuff” that’s just taking up space. After you’ve decided what you can sell, catalog the items and sell them online. Any money you make you can save and put toward your down payment.
Tip #5: Live Frugally
This last tip is certainly the easiest to accomplish and the most rewarding. In the hopes of becoming a homeowner sooner why not compromise on the things you’d like to have now. Instead of being spend thrift, save every last penny, become frugal and live within your means. If your goal is to save $500 a month for your down payment, modify your lifestyle so you’re able to achieve this goal.
You have to be patient and dedicated to save for a home. But in the end owning something can be financially liberating and comforting. Instead of dreading to make the change, focus on starting sooner so you can reap the rewards of your efforts sooner.