It’s never easy to start saving up for your first home—especially in Vancouver’s white hot real estate market. For those looking to get into the market for the first time, the down payment is often the biggest challenge. So here are a few tips on how to get closer to your first home sooner than later:
Reduce your monthly spending with the small things
Little things like buying lunch or a latté every day can add up quite a bit. Instead, make an effort to pack your lunch from home. Consider brewing your own coffee instead of lining up at the coffee shop each morning. It may seem small, but those daily purchases add up over time.
Take a vacation closer to home
Resist the urge to pack your bags for an overseas getaway. Instead of the Mediterranean or South Pacific, consider something on a smaller scale like a trip to Whistler, Portland or Seattle. Expensive plane tickets aren’t always needed to enjoy some well-earned relaxation.
Downsize your current living arrangements
If possible, see if you can sacrifice some square footage now for a bigger place later in life. Maybe go from a two bedroom rental to a one bedroom if you don’t need that extra room? Or, if you’re really brave, move back home for a year – it will definitely boost up your savings.
Take advantage of government programs
The B.C. government has a First Time Home Buyer’s Program where they help reduce the amount of property transfer tax when you purchase a qualifying home. Also, the Government of Canada offers the Home Buyers’ Plan which allows you to withdraw up to $25,000 in a calendar year from your RRSPs to buy or build your qualifying home. This amount you withdraw is not counted as your income and there is also no withholding tax on the withdrawals, and you have up to 15 years to pay it back.
Talk to your financial institution
Setup automatic withdrawals into your tax-free savings account (TFSA) or term deposit. Also, before you start saving for a down payment, make sure you reduce all your high-interest debt to zero. If you need, a debt consolidation loan could aid you in this process.
At Vancity, their Down Payment Helper Bundle can help by enhancing the amount you’ve already saved for your down payment with an ultra-low interest personal loan (at a fixed interest rate of 0.01%) for the remaining portion, up to a maximum of $12,500, to get you to your 5% minimum down payment. To qualify, you’d need at least 2.5% of your home’s purchase price, and meet their borrowing criteria.
For more information, check out Vancity’s first-time home buyer’s hub, which provides a step-by-step guide on buying your first home.