5 tips to save for a home
Trying to save for a home? Buying a house is a big experience, so it makes sense that it takes a huge amount of planning. However, many people aren’t quite sure how to start saving for this purchase. How do you build up the required amount needed for a down payment, and how can you ensure you have saved enough for mortgage payments? Here are some tips to help you build a savings strategy as you work towards this purchase.
#1 Start early
It can take a long time to save for a home! If you think homeownership is in your future, it’s never too early to start saving up. When you consider the costs of a down payment, mortgage, closing costs, and ongoing home maintenance, it makes sense that it takes many people years to make their first purchase. The average home price in Ontario, according to the Ontario Real Estate Association (OREA), was $853,915 as of December 2023. With that in mind, now is the perfect time to start saving. You don’t need to know exactly how much you want to spend, or what kind of property you want. At this stage, making regular contributions to a savings fund dedicated to a home purchase is a good start. You can decide how much to contribute at a time, depending on your current finances!
#2 Understand your financial situation
Speaking of finances, it’s important to get a good handle on yours when you save for a home. Understanding your starting point will help guide you through the process. You should examine items such as your income, expenses, debts, credits, etc. Try to figure out how much you save and spend each month, and what other financial obligations you have. This information will help you shape your purchasing timeline into a realistic goal. It can be a bit scary to look into your finances in that much detail, but it’s an important starting point to have. Otherwise, you won’t have a full grasp on how you can optimize your savings strategy.
#3 Pick a target goal
We mentioned before that you don’t need to know the exact price you want to spend on a home, and that is true. However, it may be helpful to determine an approximate range of how much you want to save. For many people, having a target goal makes the saving process easier, because they feel like they are working towards something. It encourages you to follow positive savings habits and remain consistent with your strategy. Otherwise, you may lose focus of your goal, which will put you off track. You should choose a goal and timeline that feels realistic to you!
#4 Reduce your unnecessary spending
Many of us have a guilty pleasure for unnecessary purchases, but this is a bad habit to have when you’re trying to save for a home. Little purchases may seem like nothing, but over time they can add up and take away from your saving journey. If you can, try to cut back on items you don’t need to spend money on. This doesn’t mean you have to stop buying takeout coffee or paying for wifi! However, maybe you can spend less on dining out, or cut out any subscriptions you no longer use. Just make sure you’re not taking away anything you actually need.
#5 Contact a broker
As always, we want to stress the importance of working with a mortgage broker. We help clients with all kinds of needs, and we would love to guide you as you save for a home. When you meet with a broker, you can review your finances and buying goals to determine the best course of action. Once you are ready to enter the market, your broker can also help you secure your mortgage pre-qualification, and your actual mortgage product and rate. Mortgage brokers are invaluable resources that are usually free for the client, so you have nothing to lose and everything to gain!
The process of saving for a home isn’t necessarily a fun one, but it’s important to remember what you’re working towards. The feeling of moving into a home that is yours is an amazing one, and we are here to help make your homeownership dreams come true. It’s never too soon to reach out to start planning for your purchase.
If you have any questions about your mortgage, get in touch!
