Is buying your first home on the top of your financial ‘to-do’ list? You’re not alone. Many younger Canadians cite homeownership as one of their main priorities and top financial goals. With housing and real estate costs on the rise, it can sometimes be difficult to find out how to turn this dream into a reality and start saving for that down payment. To help you get started, here are three things to put on your must-do list before you start to save:
The first thing you should do before you commit to putting your hard-earned cash towards a down payment is check in with your personal financial priorities. Although buying a home is a great investment, it’s important to ensure that it really is the right time for you to purchase. To help you decided, it’s a good idea to review your finances, focusing specifically on the amount of emergency savings you currently have, the amount of debt you carry, and any other financial priorities that are important to you. If you don’t have much in the way of emergency savings or you find that your debt is a lot higher than you thought, it might be a good idea to focus first on dealing with your debt and building your emergency savings fund before you place saving for a down payment as your top priority.
2.Deal with debt
If, after reviewing your finances, you’ve decided that your debt is not overwhelming enough to put buying a home on hold, it’s still important to focus on dealing with the debt you carry before saving for that down payment. Creating a plan that will help you repay your debt while still saving for a down payment will help you to stay focused on home ownership without neglecting your other financial obligations. There are also a lot of great ways to get rid of your debt quickly and efficiently. The snowball method, for example, in which you start by paying off your lowest debt first, while still paying the minimum on your other debts, is one strategy that might work well for you.
3. Downsize your expenses
Achieving your dreams often involves a little sacrifice and saving up for a down payment on your first home is no different. Cutting back on your expenses will allow you to put more money towards your down payment and make that dream come true more quickly. Cutting back doesn’t have to be drastic – it could just involve small changes like limiting the amount you eat out every month or choosing a ‘staycation’ instead of a vacation.
4.Do your research
Finally, before you start to save for that down payment, it’s imperative to do your research as there may be special programs or incentives available to first time home buyers that you could use to your advantage. For example, the government of Canada offers a Home Buyer’s Plan (HBP) that allows those who qualify as first-time homebuyers to withdraw funds from their RRSP to use towards the purchase of their first home.
It’s important to be prepared before buying your first home. This includes making sure that the mortgage you choose is the right fit. As a mortgage broker in Barrie, I work with many first-time home buyers as they navigate the mortgage approval process and help ensure they end up with the right mortgage solution. If you’re thinking about buying in Barrie or surrounding areas, contact me today at (705) 315-0516 and let’s get started.