Looking to buy a home? Ways to save for the down payment

With new policies coming into play, potential homeowners across Canada need to plan a budget now, more than ever. Here are some great tips which will help you begin saving for that dream home:

1) Pay off your credit card debt

It is very common for young Canadians to have credit card debit today with how easy it is to obtain them. Credit card debt lowers your monthly cash flow, which will result in having less money being saved for that down payment. Be sure to pay off your credit card debt as soon as possible to ensure you're able to put more money away. Try focusing on paying off one credit card at a time, typically the one with the highest interest rate while putting down the minimum payment on others. Once one is paid off, throw on that card's payment on to the other card, while maintaining the minimum payment as well. This is called the "snowball effect", which should help you pay off your credit card quicker.

Also consider obtaining a consolidation loan from your bank, which would allow you to combine all of your debt into one loan, with a lower interest rate. There are many options available for helping you pay off your debt quicker!

2) Get your priorities straight

If you've decided that buying a home is your main goal, you may need to adjust your lifestyle and spending habits. Thinking about purchasing a fancy new vehicle? Planning on taking your annual trip down south? Putting those plans on hold could greatly benefit your savings budget. Are you a smoker? Do you buy lunch every day at work? Quitting smoking and preparing your own lunch can help save you thousands of dollars a year.

3) Downsize your lifestyle

Have a family or a significant other that you plan on purchasing a home together with? Perhaps it is time to consider cutting down your vehicle costs if you have two cars. Car payments eat thousands of dollars a year and reducing those payments by selling a car can help propel your down payment goal. For those really serious about hitting their down payment goals may even consider moving back in with their parents to avoid having to pay thousands of dollars a year in rent and utility bills.

4) Try to save 20%

With home prices being at an all time high across Canada, saving 20% may not be possible for everyone. However, you should try to save as much money as possible to help reduce the mortgage insurance costs when buying a home. Not only will putting down 20% down payment help you avoid paying mortgage insurance, but having a lower mortgage amount will help you save thousands of dollars throughout your mortgage's lifespan. Having the extra equity will also help place you in a much stronger position, should you decide to sell the home and up/downsize in the future, allowing you to have more flexibility when it comes to pricing your home.

For more tips and strategies on financing your home purchase, contact one of our mortgage brokers today. Click here to read the full article on Global News.