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7 Money Saving Tips for Making a Down Payment

7 Money Saving Tips for Making a Down Payment

posted in Mortgage News

The amount that you can afford to put towards a down payment is arguably one of the single most important things to consider when buying a home. Affecting both the amount that you need to borrow, and the financing options available to you, a down payment is crucial for enabling you to buy the property of your choice. While down payments are undoubtedly essential, saving for them can be tricky, and some people really struggle. With this in mind, here are 7 money saving tips that can help you reach your mortgage goals far sooner:

  1. 1. Make clear goals that are realistic

    Initially, you need to determine how much you’ll need for a down payment, and working with a mortgage broker is one of the most effective ways to do this. With their knowledge of the local housing market, they can help you make a target that’s realistic and achievable.

  2. 2. Try to streamline your regular expenses

    After your mortgage broker has helped you find a down payment target, you can calculate your monthly expenses and find where you might be able to reduce those costs.

  3. 3. Set a budget that you can stick to

    A good budget will enable you to save money, while still being able to pay for the essentials without being out of pocket. The 50/30/20 ratio allocates 50% of your income for essential needs, 30% for wants, and 20% for savings or debt repayment.

  4. 4. Check if your bank can automate your savings

    Nowadays, many banks have tools that can transfer a designated amount of your pay cheque to another account, automatically, helping you to better control your spending and stay on target for your down payment goals.

  5. 5. Remember that down time is important, but vacations can be costly

    You shouldn’t have to deny yourself everything when saving for a down payment, and you of course deserve to have some time to recharge your inner batteries. However, it’s worth remembering that vacations to expensive destinations can quickly destroy your budget, and that local, more affordable options may be more suitable until a time when you aren’t saving quite so hard to buy a new home.

  6. 6. Look for ways to supplement your income

    Could you take on a second job or rent out a spare room to add a little to your monthly income every month, and boost your savings to reach your target quicker?

  7. 7. Ask for help

    You may not be keen on the idea of asking friends or family for help making a down payment, but it can help you reach your goal quicker. Just remember that your lender will need to be able to verify the source of your down payment, so any financial support that you receive must be in the form of a gift, and not a loan.

You can achieve your down payment goal with ease, provided your mortgage broker has helped you set a realistic goal (and if you choose an experienced one, they will), and you’re prepared to stick to a budget and restrict your spending until you’ve reached the full amount.

 

Mortgage News

29 dMar, 2022

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