HOW TO RAISE YOUR DOWN PAYMENT FOR THE PURCHASE OF A HOUSE?

 

Before having the keys to your new home, you must first accumulate a down payment. Here are some tips to make it happen.

Ou is determined to take the plunge and become a homeowner, one of the biggest decisions of your life. So you're probably wondering how to save enough for this major investment. Here is what you need to know about the famous 20% and some tips to get there, from the budget to using the HBP!

The down payment and what about the 20%

The down payment is the sum that you must accumulate to obtain a mortgage loan. It must come from your savings or a donation. Therefore, it is impossible to bet on a line of credit or a loan; you must also have your down payment amount at least 90 days before applying for the loan. So you have to do it in advance!

But how much should your down payment be, in concrete terms?

The dream, a down payment of 20% or more

If we often hear it said that you need a down payment representing 20% ​​of the property's cost, it is because buyers who meet this condition have their loan automatically guaranteed.

The reality, less than a 20% down payment

The cost of the insurance premium is calculated based on the value of the loan and the size of the down payment. Union complex gives an idea of ​​the upright size; please note, this link will open a new tab. In question, but keep in mind that the exact amount of the premium will be calculated when applying for a mortgage loan. Buyers must then factor this into the cost of acquiring the property and their budget. Note that the cost of the premium can be added to mortgage payments. If this amount is spread over 25 years, the difference in monthly payments will be very small and will allow you to have access to the real estate market!

Without having to wait, a down payment of at least 5%

While the minimum down payment required to buy a home is 5%, buyers who opt for this solution must meet a few conditions, including making the property their primary residence and having enough savings to pay the costs. Afferents such as the notary.

If you are wondering about the ideal downpayment for the purchase of your first home, keep in mind that the answer is complex and depends on the market's state. Each case is different, and it is best to consult a financial advisor to assess your situation and consider different scenarios with full knowledge of the facts. Get a luxury apartment in Lahore and enjoy your luxury lifestyle.

Evaluating your financial capacity, the art of fair calculation

Discipline and motivation are powerful engines for reaching a goal, but analyzing your financial capacity is essential to complete a large-scale project like buying a house. The first step in knowing how much to save is to determine your basic needs. Ask yourself! What type of house is best suited to your needs? Then calculate the costs associated with the type of property that interests you (purchase, school, municipal taxes, etc.), and determine your financial capacity. Get help from a financial advisor if needed!

A useful savings test for orientation

To paint a realistic picture of your affordability, try to save the difference between your current housing costs and the house you would like to buy. Take the test for six months and try to save the difference to top up your down payment. This will help you see if you can take on these new financial responsibilities.

In your calculations, don't forget to consider the following costs: heating, mortgage payments, electricity, condo fees, and property taxes. Please note: specialists recommend that the total of these fees does not exceed 30% of your current gross income, that is, your salary before deductions.

Take the example of a future buyer whose annual salary is $ 48,000 or a gross monthly salary of $ 4,000. By sticking to the 30% scale, the monthly fee for payment for the property should not exceed $ 1,200. If his housing costs are $ 1,000 per month, he should try to save $ 600 per month to test his ability to pay.

Tools to save more easily

Once you've determined your financial capacity, it's time to seriously save for your down payment.

The Home Buyers' Plan

The Home Buyers' Plan is an essential tool for buying a first home because it allows you to withdraw up to $ 35,000 from your RRSP per person to supplement your down payment, tax-free.

In the case of a couple, each of the spouses can have recourse to it.

You will then have to repay the money withdrawn from your RRSPs as of the second year following the purchase of your home. This repayment may be spread over 15 years, and the minimum payment each year will be one-fifteenth of the total. Therefore, a buyer withdrawing an amount of $ 35,000 will have to reimburse at least $ 2,333 per year.

Automatic savings to simplify your life

While saving isn't always easy, opting for automatic savings can indeed make your life easier. Automatic savings is when an amount is withheld from the payor automatically withdrawn from a bank account to be placed in an RRSP or high interest savings account.

The budget, an essential

Achieving financial goals such as saving for a down payment requires establishing a budget … as long as it is respected!

When budgeting, take a moment to review all of your expenses: rent, food, public transit, bike repairs, Internet, electricity, health care, debt, etc. Also, consider your discretionary expenses, that is to say, outings, hobbies, new shoes, and other small pleasures in life.

With your budget done, take a moment to review it and see where you should be making concessions to save more and allow yourself to buy your first home.

By following these step-by-step tips and consulting a financial advisor to guide you better, you should be able to see your project come to fruition!