The biggest barrier for First Time Home Buyers is coming up with the funds for a down payment. So how are SO many first time buyers and millennials doing it? HOW are First Time Buyers saving $100,000+ for a down payment & closing costs (when they don’t have the equity to leverage from another property)
đĄTraditional Sources of down payment:
-Setting aside a portion of your pay cheque on auto-pilot
-Setting aside funds outside of regular salary: gifts, bonuses, pay raises, tax refund, lottery winnings
-Investing within TFSA (stocks, bonds, ETFs, mutual funds)
-Gift from family member
-RRSP withdrawal
Typically the number one source of funds for homebuyers is personal savings. These funds are sometimes the result of years of sweat, financial self-control and sacrifice. Personal savings often sit in a Tax-Free Savings Account (TFSA) where the money is invested in low-risk securities, waiting until the day it’s needed for a house purchase.
*Your regular Checking / Savings account is no place to ‘save’ your money. Consider low-risk investing options for shorter term
đĽTIP:Follow @ambitiousadulting to learn the basics on Investing!
đĄRRSP Home Buyers’ Plan
If you have been contributing to your RRSP, you know it is a NO NO to use these funds before retirement! One of the few ways you can withdraw funds tax free is under the Home Buyer’s Plan. This allows you to withdraw $35,000 tax-free or $70,000 between you and your spouse (âď¸Because you’re borrowing the money from your RRSP, you do have to pay it back. You’ll have 15 years to repay the amount in full, and the first repayment is due two years after the withdrawal. You must pay 1/15th of the total amount each year)
đ¸ Ways to amp up your savings:
-Consider a second job (weekend, evenings, online)
-Leverage a hobby & offer your freelance services (ie: photography, videography, content creation, marketing, jewellery, woodworking)
-Tutor students online
-Make online Canva Templates and sell on Etsy
-Start a side hustle, such as: Uber , Lyft, Etsy Shop
-Dog walking / pet sitting / personal training
-Multi level marketing
-Sell clothing, home items, books etc you don’t use anymore on Facebook marketplace or Kijiji
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