Buying a home is possibly the biggest purchase you’ll ever make. Beyond shopping for a great rate and figuring out what your new monthly budget could look like, you need to start thinking about how you’re going to save up for a down payment.
It might seem pretty daunting to consider buying a home in British Columbia – especially Metro Vancouver. But don’t fear. Here are some things to consider while you save up for that down payment and make your dream of owning a home a reality.
A down payment usually ranges from 5% to 20% of the purchase price.
The more you can afford to put down, the better. You’ll also want to take mortgage insurance into consideration too. As the Canada Mortgage and Housing Corp. points out, you’ll need mortgage loan insurance for mortgages with less than 20% of the purchase price.
How to save for a down payment.
- Keep the money you’re saving apart from your other savings by having a separate account. You’ll be less likely to spend it.
- Make your savings automatic. Transfer the money you want to save each month to that separate account, along with unexpected things like expense cheques, tax refunds, or bonuses.
- Look for ways to grow that money safely. Consider something with modest, but reliable interest that’s low risk – like a Term Deposit or a High-interest Savings Account.
Research first-time home buyer programs.
The provincial government announced a Home Owner Mortgage and Equity (HOME) partnership initiative in December 2016 to support qualifying first-time buyers looking to buy a home.
There’s also the federal government’s Home Buyers’ Plan (HBP) which allows you to withdraw up to $25,000 to buy or build a home.
Talk to your financial planner to get some help and together you can assess whether these programs could be a fit for you.
Set your savings goal and make a budget.
Consider what lifestyle or spending changes you can make to achieve your goal.
Maybe bring a lunch to work, try carpooling to save on gas, or make your coffee at home in the morning. It’s amazing how quickly the savings add up.