Find Your Balance Blog

Welcome to our blog.  Our mission is to provide content that will help you find your balance!

Blog Entries

How to save for a mortgage down payment

how to save for a mortgage down payment

Taking out a mortgage is both equal parts exciting and scary. It is a big move to become responsible for a property both financially, and physically caring for it. Something you should certainly prepare for, before even starting negotiations for a mortgage, is the down payment. Having a down payment for your mortgage is pretty much essential in securing one, and while it is ideal to save up to 20% of the cost of your mortgage, it might sound impossible to save up that much money to pay in one lump sum, but it is entirely doable, and here are some tips we have in mind, to help you budget and secure that payment for your dream property.

We would suggest starting by paying off any current debts/loans you may have, it is incredibly hard to save for a mortgage down payment when you are already paying loads of interest to another party. Pay off your smallest debts first, then work your way up to the largest ones. Starting with any smaller loans you may have incurred can also help you save up, in order to pay off the larger ones in the near future. This tip will also boost your credit score, which is also detrimental in securing that mortgage loan; talk about two birds with one stone!

Next, we would like to ask that you take a step back and evaluate the things that you spend the most money on in your day-to-day life; are they essential? Is there anything you can cut back on, or even cut out entirely? You might find that you have an extra expense that is not exactly a priority, and taking it out of your budget is a great idea. Doing things like spending less on your morning coffee, and instead opting to make it at home, or not splurging on that pair of jeans that you really do not need hanging around in your closet, taking up more space. Try to take up better financial habits like using coupons for your grocery trips, or price-matching to ensure you get that great deal from the place across town. If you eat a lot of takeout food, again, try making things at home when you can find the time. We understand how busy life can be, but budgeting your grocery shopping and having your dinners at home can help you save so much in the long-run!

If this is the first time you have ever considered taking out a mortgage, particularly on a residential property, then you should also know that there are governmental perks that you can also work into your budget. For first time home buyers, you should take the time to look into the Home Buyers’ Plan (HBP), which can allow you to borrow up to $35,000 from your Registered Retirement Savings Plan (RRSP) tax free, and pay it back over the span of the next 15 years. As an added benefit to the HBP, buyers are also eligible for the First-Time Home Buyers’ Tax Credit (HBTC), which will grant you an additional $750 to cover any inspections, legal fees, and closing costs.

Finally, Frank Del Priore, Mortgage Broker St Catharines, has put together an excellent first time home buyer’s guide that you can read here.

Ride your bike to collect your rewards

If you were told there is a way you could save up to $10,000 per year doing something that made you feel good, you would probably want to know about it, right? Estimates by some studies are that using a bike as much as possible to get around—say to and from work—can save you 5 digits worth of cash every 12 months. Sound crazy? It’s not when you think of all the different ways you can come out ahead.

Less gas or public transportation expenses
If you spend $400 on gas per month getting to and from work—not at all an atypical figure—you can instantly save $4,800 per year by biking. And don’t forget other expenses, like tolls or parking. Any additional leisure activities or errands you can do on your bike puts more money into your pocket.

Less wear and tear to vehicles
It’s just inevitable that the more you use your car, the more you are going to have to pay for upkeep and repairs. Bicycle fixes tend to be much less costly. This can easily add another $1,000 to your savings.

No gym membership
Exercising with even a moderately-paced ride instead of at a fee-based gym can stuff your pockets with another $600-700 yearly.   

Less money on stress relievers
Biking tends to be a great way to blow off steam. If you currently spend a good deal of money on cigarettes, alcohol or other costly ways to unwind, riding your bike for free can put hundreds or even thousands more dollars into an account of your choosing.

Lower medical expenses
People who exercise more and have less stress tend to need less money for doctor visits or prescriptions. One study found that biking just 30 minutes per day cut yearly medical costs by $544.

Biking to work or to do errands isn’t going to work for everyone or in every locale. But if you can substitute more bike trips into your travel schedule you are almost assured to benefit financially.