Purchasing your first home can be a difficult task, especially when you need to save up for a significant down payment. Saving for a down payment may mean cutting back in certain areas and creating an optimized budget, but the rewards of homeownership are often more than worth it. As leading providers of lending solutions for residential, commercial, and construction mortgages, the team at PHL Capital Corp understands how daunting the saving process can be. That is why our team has compiled some information to help you understand how to save for a down payment and purchase your first home.
The following strategies can help all prospective homeowners save for their first down payment:
Your first home will be one of the largest purchases you will make in your life. To effectively save for this purchase, you will need to make some difficult decisions and weigh your wants vs your needs. If you are spending a significant amount of money on hobbies, subscriptions, eating out, or social events, you may need to cut down on this spending wherever possible. Excessive eating out and subscriptions that are barely used tend to account for a large sum that can be reallocated to savings for your down payment.
While debt certainly reduces the amount of money you can save each month, it also has a significant impact on the mortgage approval process. In most cases, a high amount of debt will lower the amount of mortgage you can be approved for. Before committing to saving, it may be worth paying off existing debt first. This is especially true for high-interest debt like credit cards and some car loans.
Did you know that you can borrow up to $35,000 tax-free from your RRSP to put towards your first home in Canada? If you and your partner are both first-time home buyers, you can each borrow this amount from your respective RRSPs for up to $70,000 combined. While these funds typically must be paid back within 15 years, this is a great way to secure the remaining funds needed for your down payment.
While this may be easier said than done in some instances, it can be worth looking for a part-time job or freelancing work to generate additional income. This may be strenuous for a while, but any additional income you generate can be put aside as savings for your down payment, allowing you to get there much faster.
To learn more about saving for a down payment or to inquire about our lending solutions, get in touch with the team at PHL Capital Corp. We can be reached through our online contact form or by phone at 604-579-0847 and will be happy to answer any questions you may have.