4 Ways to Save on a Down Payment for your New Home
When it comes to buying real estate, the bigger the down payment, the smaller the loan required from a bank is needed. This translates to a smaller mortgage, which means less time to pay it off and less interest accumulated as a result. And that all translates into more money staying in your pocket! If that all sounds appealing — and why wouldn't it — than now is time to start putting your savings into top gear for a down payment on your future house!
It is not the year to go on vacation!
The year before your purchase a house will be crunch time, where you will need to be ultra focused on getting your savings into check to make sure you can meet your goals. This means, unfortunately, that it may not be the year for other large expensive endeavour, such as your trip to Europe or a new car. When it comes to getting your house, it may take a few sacrifices along the road, but once you get there and have your monthly payments allotted into your budget, you will be able to start saving again — this time for your dream vacation!!
Cancel, Downgrade, or find Cheaper Alternatives
Just like you might have to sacrifice your vacation for a year or two, you may also have to sacrifice in other areas as well. Take some time and look at how much you are spending per month on things such as Cable TV, your Phone Bill or Subscriptions to APPs, Magazines and Monthly Internet Programs such Netflix. If it is clearly a superfluous, luxury item it may be time to cancel it or better yet, try downgrading to a different package by choosing cheaper option or outsourcing for a cheaper alternative.
Downsize
Downsizing might need to happen in more than just your phone package, while you are saving up for your house. Adopting a more minimalist attitude, selling some of your things and buying less, not only saves you money, but also means there is less for you to worry about moving into your new house. This is also applicable to the size of your current rental housing — smaller rentals have lower rent — and if possible, your car as well. When you have a smaller car, you spend less money on gas and insurance may be cheaper as well. Consider all these areas of potential savings in the steps of preparation towards your new house.
Remove the money directly out of your pay
Set up a bank account so that when you get paid, a certain percentage of this is automatically removed and placed into a savings account. Talk to your bank to enquire about savings account options — many banks offer accounts designed specifically for saving, such that they have a higher interest rate, providing you do not remove any of the money. To determine the percentage you are able to contribute monthly, work backwards, calculating how much you need to save and then seeing how much you can afford to remove from your paycheque over a given period of time.
While it might take more sacrifices than the four outlined above, the outcome of buying your own house in the end is totally worth it. Keep your eyes on the final prize, and when you are ready to purchase real estate, contact one of our agents to help you get pointed in the right direction!
