Does the possibility of purchasing your dream home seem difficult? Despite the 20% down payment expectation, there are other way you can secure a lower payment. Keep in mind though, the higher your down payment is, the easier time you'll have handing your expenses. Rather than suffer the disappointment of not buying your dream home, there's a number of creative ways you can try to get the funds you need.
Liquidate Certain Assets
One of the easiest ways to getting the funds that you need for a down payment is to liquidate certain assets. Liquidation means selling your assets and turning them into cash. When gathering funds for a down payment, you want to choose assets that are non-essential to you. For example, maybe you have a vehicle you don't use often or a fishing boat you rarely take out. Maybe you could part with those collectables and put them up on E-Bay, especially if it means having your dream home at the end of the day.
A Home Buyers Plan
Another option is the "Home Buyers Plan." This plan entails borrowing from your Registered Retirement Savings Plan. The Canada Revenue Agency gives you the opportunity to borrow $25,000 from the plan if you are a first-time home buyer. A first-time home buyer is defined as an individual that has not owned a home in four years. You and and your partner can both withdraw from your RRSP's if you're buying the house together. After the purchase, you are required to begin paying back the money to your retirement account over a time frame of 15 years.
Budget and Save
When it comes to budgeting and saving, most Canadians shy away. What you want to do is create two spreadsheets: one for your expenses and one for your goals. Once you've listed out your expenses (and yes, include the daily trip to Timmy's) you'll have a much better idea of where you can cut back. A few ideas to help reduce your expenses include cutting cable (do you need 15 movie channels?) and eat at home more often. You can try shopping at consignment stores and be a bit more frugal when it comes to your weekly grocery shopping (coupons!). Saving this type of money can easily contribute to your new home's down payment.
Gifts and a Second Job
Lastly, you can also recruit your own efforts and that of friends and family. Try requesting a monetary gift from your close loved ones to help you fund your down payment. Just a note: if you do this, you may also be required to provide a letter stating the money is a gift and doesn't need to be paid back! In addition, you can also get a second job that will bring in the funds that you need. A few months of work can easily help you accumulate a down payment, especially if both you and your partner are working.
The greater down payment you have, the easier time you'll have managing your finances. By using one or all of the ideas we've talked about you can get a real head start on securing your down payment. You shouldn't have to pass on your dream or struggle. Things may be tight economically, but you deserve turning the dream of owning a home into a reality.Posted by Terry Paranych on