(NC)—Buying your first home is one of life's biggest milestones, but for many first time home buyers, getting together the money for a down payment is a huge challenge.
“As a first time buyer, saving for a down payment is no mean feat,” says Ron Abraham, president of the Ontario Real Estate Association. “However, the benefits of home ownership make the struggle well worth it. Remember, the more you put down initially, the better; as this will cut into your long term mortgage costs.”
Abraham recommends a combination of smart saving, careful budgeting and tapping into government incentives to help get your down payment together and into your first home faster.
Most banks and lenders advise putting 20 per cent down – while this may not be possible for all first time buyers, Abraham suggests getting as close to that number as you can, and offers these tips to help:
• Cut back: Remember, small things add up. A recent poll by Visa Canada found that 60 per cent of Canadians eat lunch out at least once a week. At an average cost of $8.80 per meal, eating out three times per week adds up to $20,000 after ten years!
• Organize expenses: Make sure you keep track of your expenses so you can flag issues. Categorize spending so you can see where your money is going – it may motivate you to forego your daily latte.
• Borrow from your RRSP: To provide first-time homebuyers with greater access to their RRSP savings to purchase or build a home, the Government of Canada has increased the Home Buyers' Plan withdrawal limit to $25,000 per person for withdrawals made after January 27, 2009.
• Apply the First-Time Home Buyers' Tax Credit: To assist first-time homebuyers, the Government of Canada introduced a $5,000 non-refundable income tax credit on a qualifying home acquired after January 27, 2009. For eligible individuals, the credit provides up to $750 in federal tax relief starting in 2009.
To obtain more information on the First-Time Home Buyers' Tax Credit and the Home Buyers' Plan, visit the Canada Revenue Agency website at www.cra.gc.ca.
To access current mortgage information and incentives that you may be qualified for, speak to your Realtor, or visit www.howrealtorshelp.ca.