Saving for a house or a condo within the Toronto area isn’t easy – especially when juggling the hard living expenses you’re already on the hook for, not to mention maintaining a busy social life.
To put it into perspective, with a minimum down payment of 5 percent you are now looking at having to save about $80,000 or $30,000 respectively as a down payment. And those figures swell when you factor in mortgage insurance.
So how do you do it?
In my, now 13 years of real estate experience, I’ve helped my clients with their goals, whether it’s finding the house of their dreams, helping them manage their expectations of what they can look for in a home, and even imparting some helpful tips and guidance on how to save for their next home!
In the end, it’s all about following some very important, and crucial, steps.
1) Goals, Goals Goals.
Unless you come into some sort of swift and sudden windfall, you likely aren’t going to come up with your down payment overnight. So break it into smaller targets that are realistic and timely. That could mean paying yourself first before other expenses, or putting aside a couple to several thousand dollars every year.
2) Take Your Tax-Free Savings Account Seriously.
If you don’t have one yet, stop by your bank and inquire about opening up a Tax-Free Savings Account (TFSA), which will keep your down payment savings separate from your monthly operating expenses. And, therefore, out of reach! Not only will this discourage you from spending it prematurely, but a surging TFSA balance should motivate you to stay at it.
3) Reference the Home Buyers’ Plan.
Did you know the Canada Revenue Agency offers a Home Buyers’ Plan (HBP), a program which allows you to withdraw up to $25,000 in a calendar year from your registered retirement savings plans to buy or build a qualifying home for yourself? It can be a huge help.
4) Hold onto your holiday haul.
Now that you are well on your way towards saving for your down payment, remember that Christmas, Hanukkah, birthdays and related celebrations typically mean a little extra cash coming your way. Yes, once upon a time, that would have made for some great disposable revenue — or an easy credit card payment. But alas, those days are gone. For now, at least. You have bigger fish to fry! So toss it right into your TFSA.
5) Also, save those tax refunds.
This one is pretty straightforward: put any refunds from your income tax toward your down payment savings. After all, each year it feels like ‘found money’, doesn’t it? So don’t waste it.
6) Go outside of hot markets.
Expand your search for the perfect home by looking beyond blistering mortgage markets like Toronto.
7) Never lose sight of the prize!
That exclusive designer bag you can’t stop thinking about? The dream car you want everyone to see you behind the wheel of? Forget about them for now — for many years, even. Remember you set a goal and you are still trying to reach it. One which will prove to be the sweetest acquisition of them all.