Buying a home is an experience that many Canadians dream about, but there often is one major obstacle that must be overcome: saving up for the new home purchase. Many Canadians will finance a large portion of their real estate purchase with a mortgage loan, and this makes it faster and easier for Canadians to become homeowners. However, most will generally need to come up with at least five to 20 per cent of the sales price as a down payment. In addition, closing costs can also add up, and this can add on to the total amount of up-front money that Canadians will need to bring to the closing table with them. Therefore, saving up for a down payment and closing costs is a necessity for those who are interested in buying Canadian real estate, and it can take most individuals a considerable amount of time and effort to save the full amount of money needed. Thankfully, there are several different methods that you can employ to save for your home purchase.
Existing Home Equity
First, if you are already a home owner and are planning to sell your existing home when buying a new home, you can use your equity in your existing home as a down payment. In most cases, your existing home will need to be sold, and you will need to have cash in hand before you can close on your new home loan. However, this is a source of funds that many existing homeowners can benefit from. You can speak with a real estate agent to learn more about the value of your home and to estimate the equity you have available.
If you do not have enough home equity for the full amount of down payment and closing costs, or if you are not a first-time homebuyer, you may need to save money to obtain the full amount of funds needed. Those who are saving their money in a personal savings account to use as a down payment should consider the benefits of an automatic funds transfer from your employer into your savings account with each paycheck. This way, savings will be automatic, and you will not have to risk dealing with human error. Saving money is most effective when regular savings are planned for in a personal budget, and when savings are completed on a regular basis.