SAVING FOR A DOWN PAYMENT – A GUIDE FOR FIRST TIME HOMEBUYERS
How will you save enough money for a down payment?
Saving enough money to buy a home can seem over-whelming. But with a sensible savings or investment plan, you may get your down payment faster than you think.
1. Personal Bank Accounts – open a personal bank account and set aside money specifically for your new home. Make a habit of paying into this account regularly, just as you pay your monthly bills.
2. Investments – as the money in your bank account grows, or if you already have money set aside, you may want to invest. Many will use a Tax Free Savings Account to accumulate for their down payment.
3. Using RRSPs towards your down payment – Registered Retirement Savings Plans are a good way to secure your financial future while enjoying tax benefits today. You may also be able to use your RRSP saving towards the purchase of a home. The current Home Buyers’ Plan lets first time home buyers withdraw up to $25,000 from their RRSP to buy or build a home. The amount withdrawn is treated as a loan and must be repaid within a 15 year period.
4. Bank of Mom or Dad – a gift from an immediate family member can be used for a new home purchase. Keep in mind this must truly be a gift and not repayable.
There are many considerations when purchasing a new home and good planning along with solid advice will assist you in getting into home ownership.