01 Mar Saving for a Down Payment
I get told all the time “Dan, I would love to buy right now but I can’t afford the down payment”. Well here are some saving tips that I believe are beneficial and will get you that down payment quicker that you thought.
1. Investments – The government allows you to take up to $25,000 out of your RRSP’s to use for a down payment of a home. The amount withdrawn is treated as a loan and must be repaid within a 20 year period, starting in the third year after the withdrawal.
2. Open a personal Bank Account – Set up a bank account that automatically withdraws money from your account every time you are paid. This way you will be saving money effortlessly. You wont even notice the money gone. 10% from every paycheque goes a long way.
Remember that if your down payment is less than 20% of the purchase price, the mortgage must be insured. This is usually about 2% of the purchase price. The insurance protects the lender in case the borrower doesn’t repay the loan.
All the best!