How To ?
Save a Down Payment for a Home or Investment Property
1. You must prioritize
Saving for something important—like a home—is all about priorities. Do you go out to eat all the time, take expensive vacations, buy all the latest stuff and drive brand new cars? Or are you willing to tighten your belt and save for a house? It is up to you. Which is more important?
2. Pay off your credit card debts first
You can’t really save money if you are paying a lot of interest to someone else. The first thing you should do is pay off all of your debts. Start with your smallest high interest debt, and pay it off. Then take the minimum payment from that debt and use it to help you pay off the next small debt that has the highest interest rate.
3.Save more from work
When you get a raise at work, take that extra money and save it in a separate savings account. It may not seem like much, but it will add up. Also try saving bonuses, extra sales commissions or tax refunds in your separate savings account.
4. Look for cheaper ways to do things
- This is how smart people save a lot of money. They make a lifestyle of finding cheaper ways to do things without diminishing their fun. Here are some great examples:
- Do you buy a lot of new books? Try the library. They have zillions of books that you can borrow for free.
- Do you go out to a lot of movies? Try renting or sticking with cable. Some people are now even dropping their cable in favor of watching shows online. This works really well in the U.S., but it is getting better in Canada.
- Do you eat out a lot? Try eating out less or look for cheaper places to eat that you still like. You can also look for 2 for 1 coupons or buy an Entertainment Book and only eat at the places that have coupons (this will cut your eating out budget in half).
- Do you spend a lot of money on your hobbies? Try spending less or finding other hobbies that cost less—at least for a while.
- Do you buy a lot of new clothes? Try sticking with your current wardrobe for a little longer, or selectively buy clothing items that coordinate with what you already have.
5. Borrow from your RRSP
You can withdraw up to $25,000 from your RRSP to buy your first home. This is a great way to come up with a down payment if you already have some RRSPs.
Use the Tax Free Savings Account
The Tax Free Savings Account can also be a great place to save your down payment money. The money can grow tax free in this account.
6. See if your city has a First Time Home buyers Program
From time to time some cities have programs where they provide new home buyers with part of their land Transfer Tax