How can you build up your down payment savings?

Are you trying to grow your down payment savings so you can purchase a home? Your down payment is the biggest upfront cost of buying a property, which means it’s important to plan ahead when building these savings. You must be ready to invest your time and money into this process before you can successfully enter the housing market! Here are some tips to help you save your down payment. 

Set a realistic budget

Saving for a down payment means making some financial sacrifices. This is a huge amount of money you need to gather, and for most people this requires reshuffling finances and giving up some luxuries. Creating an accurate and realistic budget is the best way to ensure you can cut back on spending, save for a down payment, and still meet your financial obligations. Your budget must account for your income and existing expenses that cannot be waived, such as rent or groceries. You will be working with whatever is left after you make any necessary payments, which is where it can be hard to budget. Where are you supposed to cut down on your expenses? It’s important to be realistic and target areas where you know you can pull back. You don’t have to ban yourself from getting a takeout coffee once in a while, but perhaps you have unused television subscriptions, or you could avoid clothes shopping for a bit. You can also explore budgeting apps to help get yourself organized and stay accountable. There are several apps designed to help you manage your finances more effectively, save money, and gain financial independence. If you’re trying to build your down payment savings, this could be a good solution!

Make regular contributions

It is most effective to make regularly scheduled contributions to wherever you are collecting your down payment savings. If you are just tossing money into a savings account here and there, you won’t feel as much of a sense of obligation. As a result, you will likely find your savings grow quite slowly. Instead, settle on a certain amount of money you want to contribute each week or month. It can help to imagine you are already paying your mortgage, and these contributions are your mortgage costs. Treat these savings as a high priority, because saving your down payment can be a long journey. The important thing is to remain consistent with your contribution amount and schedule. You can automate money transfers if you don’t want to have to remember to make these contributions yourself. Make sure you hold yourself accountable to this task. You are responsible for saving this money, so it’s up to you to ensure your down payment keeps growing.

Focus on your credit card

There are a couple of ways you should pay attention to your credit card when saving for a down payment. First, you should try to pay off your credit card debt. At first, you may not think it makes sense to put extra effort into paying for something other than your down payment. However, a credit card is something that you have to pay for no matter what. By paying off your debts quickly, you can limit the amount of interest you will owe in the long run. This allows you to save for your down payment instead of having to hand over extra money to pay off credit card debt for years. 

The other credit-related item to consider is to avoid using your credit card when possible. Try to pay for things with cash or debit cards. This way, you aren’t spending money you don’t have, and you won’t be surprised with a high bill each month. It’s so easy to use credit because of the delayed need to pay, but this can cause trouble down the road. Limit your credit card usage so you can maintain your savings!

Speak to a mortgage broker

Of course, your mortgage broker should be your go-to resource while you are saving for a down payment and planning your home purchase. We can assist you with every aspect of the buying process from start to finish. We can advise you on the best ways to budget, what mortgage products might fit you best, and how to secure your pre-qualification. Your broker can also help you determine whether you might benefit from a First Home Savings Account or other savings tools. Brokers are an invaluable resource during this period, and you certainly don’t want to miss out on a broker’s guidance. 

Building your down payment savings takes time, patience, and effort. It can feel frustrating at times, but your hard work will pay off once you secure your dream home and mortgage! If you’re ready to get started on this journey, don’t hesitate to contact your mortgage broker now to set the wheels in motion.

If you have any questions about your mortgage, get in touch!