Posted on Friday July 13, 2018

How to save up for a down payment as a first-time homebuyer

Who isn’t dreaming of owning a house or a duplex? Home ownership is easier here in New Brunswick than in ultra-expensive markets like Toronto and Vancouver, but it’s still a big challenge. With prices up significantly, and inflation and interest rates skyrocketing, homeownership might seem out of reach.

So how do you do it? Start by saving up a good down payment. Here are some quick tips to help you get there fast and improve your credit score.

Set up a weekly automatic transfer

All Canadian financial institutions give you the ability to automatically transfer a set amount from your account each week. If you save $65 a week, you’ll have $3380 at the end of the year. In 5 years, you’ll have saved up enough for the minimum down payment (5%) on a property worth $325,000. Even if it’s small, regular saving is an excellent way to improve your credit score and solvency in the eyes of financial institutions. It’ll work in your favour when negotiating your mortgage!

Reduce nonessential spending

Cutting your personal expenses is no small feat, but you don’t have to sacrifice life’s little pleasures to become a homeowner. You just have change a few habits and make more budget-friendly choices.

Drive a used car

Used cars are great for anyone seeking top value for their dollar. Look for a model with good long-term reliability—they’re cheaper to maintain and hold their resale value.

Do a home or apartment swap

Dreaming of going to the south of France? Many French people would love to visit Canada. A number of home exchange websites like HomeExchange and TrocMaison let you temporarily swap digs with someone else during your trip. It’s a great way to save on accommodations and food while discovering a new culture.

Plus, your host can water your plants and pick up your mail while you’re away!

Get creative on activities

Instead of a family outing to the cinema, dim the lights, make some popcorn and watch a movie in the comfort of your living room! Skip the expensive night out at a restaurant—channel into your inner chef and try out some new recipes. Put on your favourite music and light a few candles for a cozy and intimate atmosphere that restaurants just can’t match.

Go to festivals and take part in free community activities all year long. What a great way to have fun on a budget!

Sell things you don’t need anymore

Classified websites like Kijiji and Facebook Marketplace abound online, making it easy to sell things you no longer use. Prom suit looks like new, but a few sizes to small? You could make a thrifty young man’s day. Not playing any of the video games in your awesome collection? Plenty of gamers would pay good money to take them off your hands.

Use these little tips to you reach your ultimate goal faster: saving up for a down payment and buying a house.

RRSPs and the FHSA: Your new best friends

To stack the odds in your favour and promote home ownership, the Canadian government has created the Home Buyers’ Plan (HBP), which allows you to withdraw money from your RRSPs, and the Tax-Free First Home Savings Account (FHSA) which comes into effect in April 2023. The FHSA combines the benefits of an RRSP (tax relief) and a TFSA (withdrawals do not need to be paid back).

To learn more about these programs and draw up a plan to buy your first home, make an appointment with an advisor. They will be happy to help make your home ownership dreams come true!

Wondering what the mortgage payments on your new home might be? Use our online mortgage calculator!