Owning a home is a goal for many people, and it is not only a way to secure your residence for the long term. It is an investment that will pay off throughout your life. This is probably the biggest purchase you will make, and putting together the funds can be overwhelming, but fortunately, there are effective methods to get your downpayment built up.
Saving money for a house is no small task, but the payoff is worth it. Use this as a plan of action to start building a downpayment, and then when you are ready, you can confidently make your home purchase and start your new home ownership adventure.
The best time to start putting money aside for a home is now, so you must begin today. Does it seem impossible? Here is how to save money for a house.
Write Down Your Goals
Without a plan of action, you have nothing to work towards, so you need to write down your goals and work towards them. Start with things like:
- The type of house you want
- How much do you want to spend
- The area you want to live in
- When you want to purchase the house
These four things need to fit together and be realistic about your income situation.
Meet with Professionals
Sometimes it’s best to talk to a financial professional about what you want to do. They are there to help you and can advise on effective ways of building up your down payment so you can make a home purchase faster.
A financial advisor will review your current financial situation and put you on a realistic path to home ownership. Meeting with a bank manager is also helpful because they can see how much you qualify for and let you know how much of a down payment you will need.
You can also meet with a real estate agent for advice. They usually have a team they work with that includes lenders and can offer advice and direction to get you ready. These professionals know what is required to purchase luxury homes for sale, so their advice is invaluable.
Prioritize Your Life
We all trade time for money, and how much cash we have left at the end of the month is determined by our spending habits. To be able to buy a home, you need to make saving your top priority. This means strategically adjusting how you spend every day and over the month.
Start with a budget to see where you are at. Your income may not be flexible at your current job, but you can always get a higher-paying job or find a side hustle to bump up your income. Next, check your spending. Do you pack a lunch for work and make home-cooked meals every night, or do you eat out regularly? How about a car payment?
Every expense you have can be adjusted if your priority is to buy a house, so see where you can tighten your belt and make the necessary adjustments to set aside money each paycheck.
Pay Off Credit Cards First
It’s difficult to save money when you are accumulating debt, and high-interest credit cards will stop you in your tracks. Stop spending on credit and instead put that money towards paying them off. Banks need to know your financial situation and determine what they will lend you based on how much your monthly expenses and debts are.
Take your credit cards out of your wallet and use cash for all your purchases. This is eye-opening because it shows you how much money you have.
Pay Yourself First
Now that you have put the credit cards away and adjusted your spending start a payment plan for yourself. This should align with the goals you have for buying the home, and you will start to see the money accumulate over time. This “bill’ should come right off the top when you get paid, so you don’t have a chance to spend it.
Any windfalls you get should be immediately put into your downpayment savings too. This includes:
- Work bonuses
- Inheritance
- Tax returns
- Cash gifts
This is money outside your regular income, so tuck it into your house fund before you start spending it in your mind.
Take Advantage of Different Programs
Some great incentives and programs are offered, depending on your area, and they can assist you in putting together a down payment for your home. First-time homebuyer plans help by giving you money for your interest-free downpayment and paid back over a set number of years.
You can also start a tax-free savings account for your down payment money and even borrow from your RRSPs if you have any. These all help people with the purchase of their home and are worth looking into to see how they can benefit you.