The dream of owning a home is among the main ambitions of many Canadians. For those who have this goal, how to save money to buy a property is a major concern. After all, it is one of the biggest and most important financial decisions made throughout life.
Faced with this situation, some choose to pool all the money to pay for the property in cash, and some decide to save only an amount for the down payment and finance the rest through a mortgage. In both cases, you need to have some amount set aside.
That’s why we’ve prepared five practical tips to financially plan your home purchase. Check it out!
1. Reserve at least 20% of the property’s value
In Canada, most credit lines allow financing of up to 80% of the property’s value. Therefore, it is important to plan to save at least 20% of the property price to buy a house or apartment.
Remember that 20% is the minimum amount needed to apply for a mortgage loan. However, the larger your reserve, the less interest you will be charged on the purchase. With a good down payment, the financed amount will be smaller, which also reduces interest payments.
Therefore, for those who are thinking about how to buy an apartment or a house, it is important to know that in some situations, payment in cash may be the best option, as it also gives the possibility to negotiate a greater discount.
2. Save 30% of your monthly income
If you are thinking about saving money to buy a property and have opted financing, it is good to set aside at least 30% of your monthly income while you are saving the amount for the down payment.
This makes it easier to adapt your lifestyle to this situation, and when it comes time to pay the installments, you don’t have to make a radical change to your finances.
3. Prepare for additional expenses
One of the big mistakes of those preparing to save money to buy a property is to neglect the expenses related to deeds and documentation. Buying a property involves a certain amount of bureaucracy. In addition to paying the bank papers, the buyer needs to pay attention to the Real Estate Transfer Tax. And these expenses vary according to the municipality, notary costs, legal analysis of documentation, and property valuation.
To avoid surprises and the need to postpone the purchase of your property, plan to allocate part of your emergency funds to these expenses.
4. Know the region where you want to live
A factor that is usually forgotten by those who intend to buy their own home is evaluating prices related to the region where the property is located, which can make a total difference in the budget.
That’s because the cost of living usually varies from one neighborhood to another. The prices charged in commerce in each region and transport costs, for example, usually vary significantly and must be considered.
5. Seek help
For those thinking about how to save money to buy a property quickly, there are some financing options available in the market. However, each has specific rules to define what you need to finance a property.
For example, through Homewise, property buyers have access to over 30 banks and lenders to match consumers with tailored mortgage options for those seeking to finance their property through a mortgage.
In addition, you can count on real estate experts, such as Properly, which work 100% online. Properly simplifies the process of buying or selling a home in Canada.
In conclusion
If you want to save money to buy a property, you should have a solid plan in place. Some people spend their lives planning. However, they never achieve what they long for because they lose focus. If you really want to buy an apartment, make this a priority. Giving up some things is part of your achievement.
Saving money may seem difficult and even boring at first, but you will eventually get used to it — and you’ll find that the sense of achievement pays off!