We hear it time and time again, and it’s true… Saving for a down payment is the absolute hardest part about purchasing a home – especially your first home. If you’re looking at a $400,000 property, a 5% down payment is $20,000. 20% down is $80,000.
That’s a lot of money, but believe it or not, you can save for a down payment. It won’t be easy. It will take time, discipline and dedication, but you can do it. Honestly.
Here are a couple of things you can start working on today that will put you on the right track…
Get rid of that pesky debt
If you have consumer debt – credit card, personal line of credit etc. – you need to get these items paid down. You don’t want your debt torpedoing your home purchasing plans. Eliminate as much of your debt as you can. Depending on your specific situation, a consolidation loan may be a way to go, as this will eliminate some streams of revolving credit and may help you pay down your debt faster. Above all else, get rid of the highest interest debt first (typically credit card debt) and work your way down your list from there.
Sort out your banking setup
Once you’ve tackled your debt, you’ll want to open a separate savings account at your bank. You can even set it up so it is a ‘deposit only’ account (meaning you can’t withdraw funds without going into the branch and speaking with a teller). This will be your down payment savings pot. Use it for nothing else. Every penny that goes in here should be used for a down payment. Indeed, now you’ve worked hard to pay down your debt, you should be able to deposit what you were paying on servicing your debt into this account. That will stack up fast. $600 per month is $7,200 per year.
Again, saving for a down payment won’t be easy, and barring a lottery win, it will take time. However, if you make it your number one goal, and implement the steps listed above, it can be done. Take it a step at a time and don’t let it overwhelm you. Good luck and happy saving!
Whether you’re buying, selling or investing, or simply have some questions about the Kelowna real estate market, please contact Walker Real Estate. We are here to help and we work with everyone, from couples buying their first home, to folks who are downsizing.