You have dreams to own your own home but can you afford it? The Canada Mortgage and Housing Corporation say your housing cost should be less than 35% of your gross income. You need a down payment and an income to support the mortgage.
Are you trying to work out how to save money for a house? If yes, read on to learn what you can do.
Set Yourself a Goal
If buying a home is a vague hope then you’ll never save enough for a down payment. You may not even be able to pay a mortgage. You have to get serious about this goal.
Goal setting involves being clear about what it is you want to achieve and by when.
Start by deciding how much you can afford to pay each month on a mortgage. Your total housing costs should not exceed 35% of your gross income so the mortgage element will be about 25% of gross earnings. Your current monthly mortgage payment is therefore about a quarter of your gross income.
Check out what this means in terms of a total mortgage amount with a lender and remember the extra expenses you’ll have when purchasing. The term of the mortgage will determine the total amount.
Remember that the longer you have to pay it off, the larger the amount you can borrow. Be aware that the longer the term the more you will be paying in interest over the life of the loan.
Set a goal to raise a 20% down payment. This way you avoid private mortgage insurance. Set a date by which you will have raised the down payment based on how much you intend to save each month.
Cut Your Costs
Examine your expenses. It’s time to be focused on what’s important and stop wasting money on stuff you don’t need.
Do you need that expensive gym membership? Perhaps you can keep-fit more cheaply by running instead. Reduce your restaurant and entertainment bills. Eat at home more and reduce spending on clothes.
Earn More Money
Are there opportunities to earn more money? Could you take on extra shifts at work or even a second job?
Use your skills to teach other people, for a fee. Liquidate your junk by selling it on eBay.
Decide how much you need to live and set that money aside at the beginning of the month. Thinking that when it’s gone, it’s gone, will help you live within your means.
Put aside the money you have decided to save, at the beginning of the month too so you won’t dip into it. If you get any windfalls or bonuses, add them to your savings and you’ll bring the date you can own your own home nearer.
That’s How to Save Money for a House
That’s how to save money for a house. It will take some resolve but others have done it before you. You can do it too.
Talk about your dream to own a house by contacting us here.