How To Save For A New Home
21 Sep 2017
Saving for a new home can seem overwhelming and impossible, especially for millennial’s and young families just starting out. Navigating the homebuyers market is complicated, but the more you research, the more informed you’ll be, and the less scary it will seem.
Dedicated to providing current and future residents of Barrie and Innisfil with the information they need to make an informed purchasing decision, we’ve outlined some tips on how to save for a new home:
Be Aware of Your Credit Score
Your ability to borrow money to purchase a home depends on your credit score and the rate you pay. If you have a bad credit score, lenders will be hesitant and potentially unwilling to give you a loan. Your credit score is based on:
Record of timely payment on other loans
Amount of outstanding debt
Length of credit history
Number and types of accounts opened recently
Your mix of credit accounts/cards
A credit score above 740 is likely to give you the best interest rates, whereas a credit score below 580 can prohibit you from borrowing any money at all. So – before saving for a home, make sure your credit is in good shape.
Cut Cost Where Possible
When saving for a new home, consider cutting unnecessary costs. If your family no longer watches cable TV and you do not use your home phone, eliminating these bills from your monthly expenses can really add up. You can also save money by:
Bringing a lunch from home
Commuting by carpooling
Ending your gym membership
Spending less money on hobbies (sports games, concerts, etc.)
Borrow From Your RRSP
Canada Revenue Agency’s Home Buyers' Plan lets qualifying homebuyer’s use up to $25,000 of their RRSPs to buy a home. Couples can use up to $50,000. Qualifications include:
The home must be the principal residence
The home buyers must not have owned a home within the past five years
The loan must be repaid within 15 years
Put Money Away & Don’t Touch It
Open a savings account where you can hold the money you’d like to use towards your new home. Having an account that is separate from your daily spending account will keep your money safe and secure. This separate account will also help you to leave the money alone until the time comes to use it for your home.
Bonus Tip: Scheduling automatic transfers into your savings account will make saving a little bit from each paycheque a lot easier.
Save Your Raise, Bonus, Or Tax Refund
If you receive a raise, bonus, overtime, or a large commission at work, place the money straight into your savings and watch your account grow. While you may be tempted to spend this hard earned cash immediately, saving for a home in the right way will pay off in the end.
Putting your tax refund right into your savings account is another great way to save money. You can also reduce the amount of tax you pay by donating to charity and contributing to an RRSP.
Find A Second Job
If you’re having a hard time saving because you’re simply not making enough money to keep up, it may be time to look for a second job. If you’re already working 9-5 Monday to Friday, think outside the box and find an opportunity for nights and weekends. Bartending, retail, catering, or party planning - there are lots of companies that require extra help during after work busy hours. If you have an interest or talent, you may even be able to start your own part time business!
Sell Things You Don’t Use
Do you have furniture, appliances, sports equipment, memorabilia, or designer handbags you no longer use? Consider posting these items on VarageSale, Kijiji, Ebay, or Facebook. You may not want it anymore, but someone else might, and they may be willing to pay.
While you’re unlikely to make thousands by selling used goods, a few hundred dollars can help with extra costs and taxes. You’ll also clear out some clutter, and you won’t have to take unwanted items with you to your new home!
Saving Takes Time, But You Can Do It!
To learn more about saving for a new home, it’s always a good idea to ask your friends and family about their personal experiences. If you’re interested in learning about how our Bradley Homes homeowners feel about their purchases, check out our testimonials.
For more information about Bradley Homes, contact us today:
Bradley Homes Head Office