How to start?
First, before you start saving you need to find out how much you could potentially borrow. A mortgage calculator is helpful in determining this amount. Remember, mortgage payments should not exceed 30% of your monthly income. Once you determine the total value of the mortgage, you can determine the amount of the first deposit and the duration of the payments. For example, a first 5% deposit when buying a $ 300,000 home would be the equivalent of $ 15,000 or more. If you extend the savings over a few years, it’s about $ 3,500 a year for 4 or 5 years, which means between $ 250 and $ 310 a month. This may seem daunting, but rest assured, there are several ways to facilitate the savings process.
The larger the initial deposit, the lower the monthly payments will be!
When you make a first significant deposit, the benefits are many. Monthly payments and interest on these payments will be less. Also, a first deposit of 20% could even save the owner from paying the insurance on the loan, which could in some cases represent 1 to 3% of the total amount. For those who can not make a deposit of 20%, expect to pay a higher monthly interest.
Driving and respecting your budget will be the key to success in order to save for a first deposit. Sometimes, if possible, having multiple jobs is also a solution. There are two advantages to having multiple jobs: incomes increase while expenses decrease because you have less free time. Finally, selling unnecessary items could also bring you income.
Also, you should monitor your daily expenses. A daily coffee is $ 60 at the end of the month. Taking his luch in town would be $ 100-200 a month. Also, take public transportation, which will save you money on gas and repairs. In addition, when you shop, buy products that are special. If you rent an apartment, it might be better to move to a cheaper apartment or, at least, to have a roommate. Do not forget about tax revenues too.
There are many ways to increase your income, but you must be rigorous. For example, keep detailed monitoring of all your expenses. Afterwards, it’s up to you to see where you can cut.
Improve your savings
Now that you have established the sources of savings, it is time to improve them. For example, you can earn interest on your savings if you invest in a TFSA, a guaranteed certificate, and so on. Also, as the first buyer, you benefit from a large number of government grants such as the First-Time Home Buyer’s Tax Credit (HICP). This tax credit allows you to withdraw up to $ 25,000 a year from your RRSP. However, this amount will have to be repaid in the next 15 years.
As well, you could benefit from a large number of provincial and municipal grants, including the purchase of homes with responsible energy consumption .
The first deposit can be a much more enjoyable experience if you stick to the plan you set. If, ultimately, you want to own your own home, discipline and rigor are absolutely necessary.