WHAT IS A DOWN-PAYMENT? A down payment is, quite simply, a sum of money that you put towards the purchase of your home.
The more you have to start with, the less you’ll need to borrow (which means you will be paying LESS over time for your beautiful home!).
This means that your down payment is an investment in your future!
How do you save for this investment? There is a great article in The Globe and Mail that outlines some key strategies for First Time Home Buyers like you:
Three tips to save a down payment
1. Keep the money apart from your other savings. That way, you’ll be less likely to spend it. (**look at automatic payments into your savings account)
2. Find a way to grow your money safely. You don’t want to wake up a month before you plan to buy your home and find you have lost money due to a drop in the stock market.
3. If you’re a first-time buyer, you might want to save for a down payment in a Registered Retirement Savings Plan (RRSP). Under the government’s , you can take up to $20,000 from your RRSP for a down payment on your first home. You won’t pay any tax on the money as long as you pay it back over the next 15 years.
- High-interest savings account – Every time you get paid, you can put some money into this account. When you’re ready to buy, you can easily get your savings out. For some people, that’s not a plus, however, because it’s a little too easy to take the money out and spend it on something else.
- Guaranteed Investment Certificate (GIC)- As your savings grow, you may want to buy GICs. If you think you’ll be tempted to spend some of your savings, you can lock your money in with a GIC so that you can’t easily get at it.
- Canada Savings Bond (CSB) – The federal government offers CSBs to investors at certain times each year. They pay minimum interest and you can invest as little as $100. One type of CSB is cashable any time. Certain provinces also offer provincial savings bonds.
- Money market fund – A money market fund is a mutual fund that invests in safe, short-term products. The fund is run by a professional investment manager who invests the money for you. You can get your money quickly and easily, usually within 24 hours. However, like other mutual funds, there are fees to pay for having your money in the fund. There may also be fees for taking your money out.
Remember: It takes time to save up a down payment!
You can speed up the process if you invest your money so it will grow. Just don’t take more risk than is comfortable for you
Content in this section is provided in partnership with the Investor Education Fund, a non-profit organization promoting financial literacy to Canadians. To find out more go to GetSmarterAboutMoney.ca. Saving for a down payment
For more information on this or other interesting Real Estate topics, please get in touch for Moore today! I look forward to helping you find your first home, as YOUR Guelph REALTOR®, Krystal Moore.
Royal Lepage Royal City Realty, Brokerage
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214 Speedvale Ave. W.
Guelph, ON N1H 1C4
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I have over 15 years’ experience in Sales and Customer Service, I am motivated, dedicated
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