So, you've decided to buy your first home or investment property but need some money for a downpayment, check out this video with with tips to save for your first home and mortgage:
One of the biggest challenges for most people is actually SAVING enough money for a downpayment, here are our top 5 tips to do this:
- Set a Goal - As they say "A Dream is just a goal without a deadline" so decide, when do you want to own? How much do you need to save? etc. and they put that plan in action.
- Create a Budget - Ultimately you need to PAY YOURSELF FIRST so, using your goal, start paying into your savings BEFORE spending money on other expenses
- Live Like You Own - Renting for $700? Know you'll be paying $1200 when you own? Why not start saving that money now? That's $500 a month, then you'll know if that will even work for your lifestyle!
- Match Your RRSP - Is your company offering free money? Make sure to take all of that free money! You can take up to $25k tax free if you're a first time buyer for your downpayment.
- Do NOT live on Credit - Don't have the money? Then don't buy it! Only use your Credit Card if you have the money to pay it off each month!
When you're ready to get started make sure to CONTACT ME your Mortgage Broker in order to explain the process and help you shop for the best Mortgage Product, term and rates that are available on the market!
How To Save and Still Live
Now that you know your current cash flow you want to figure out your future cash flow. Calculate all of the new costs associated with have a mortgage.
Utilities (Estimate $75 per month)
Cable and Internet ($100-$200)
Bigger food budget (if you are still living with mom and dad)
How much more are your monthly expenses? The difference between current expenses and future expenses is the minimum amount you need to be saving to prepare yourself to buy. If you haven't saved up a down payment yet then you will continue saving this way until you have your down payment. If you have a down payment already then I would recommend saving this way for a few months while you look for a house to get familiar with the increased expenses well in advance.
Create a Plan
- Download the cash flow analysis form and complete a current budget. This will show you what should be left over each month after all of your expenses
- On a new cash flow analysis form, input your future cost of living expenses (Mortgage, Strata, Utilities, Food, Cable/Internet, Insurance). You will now have an accurate future budget to help you understand what the costs will be when you buy.
- Figure out how much of a down payment you want/need to make and begin saving the difference between future cash flow and current cash flow until you have your down payment.
You have now created your time frame for buying a home. Regardless of whether it is 3 months or 3 years you now have a plan which can be altered and adjusted if necessary. Most importantly you can begin to work with a realtor and mortgage broker to find places that are in your price range.