With property prices running away from us with every month, it is getting harder and harder to save a house deposit and purchase your first property. It seems the longer the time you take to gather your deposit, the higher the price your house or investment property will be when you do get around to buying it. Sounds familiar? Here are some useful tips on how to save for your deposit on your first home.
If you are currently renting a property, a good way of saving some money is to downsize into a smaller rental. Look at all the short term rentals in Toronto and surrounding areas to find a smaller apartment or perhaps one in a cheaper location. You may even want to consider renting a room in a private house or move in with a friend or your parents.
One way of buying your first home and saving the deposit quickly is to buy a share of a property. You and some friends could pool your resources and invest in a house together. Ensure everything is legally recorded so that everyone is appropriately compensated when it comes to selling the property in the future.
If you are in a hurry to get on the property ladder, another option is to ask your parents for a loan that you can pay back to them in installments.
In order to see your savings grow, you ideally want to save them in an account offering a rate that beats inflation – otherwise, the cash will end up losing value over time. While there’s nothing wrong with a traditional savings account, if you’re saving a large sum of money, you may have to pay tax on the interest your savings generate. If you deposit your savings into an Isa, they’ll remain tax-free.
Cut down your everyday living expenses and do everything you can to save the extra dollars. Shop at discount stores and choose cheaper brands. Forego indulgent treats and luxury items such as expensive wines, makeup, or clothes. Sometimes it helps to tell friends and family about your plans to buy a house and then they will understand why you can’t attend lots of social events with them.
If you have lots of unused possessions lying around, sell them on websites such as eBay or have a yard sale. It is incredible how much cash you can make from selling your stuff. Your trash is another person’s treasure.
Work it Up
Consider taking on an additional job to increase your savings. Perhaps you have a talent for making stuff that you could sell on Etsy or get an evening job at the local shop. If you work in a profession during the week, you could use your skills at the weekend to make extra money. For example, if you are a plumber, you could do some jobs at weekends. You could live off your primary income and then save all of your secondary income.