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.