The myth of the “millennial renter” may not actually hold water. While some members of this demographic are indeed putting some life goals on hold (like having children) due to significant debt, a recent RBC poll found that millennials are quite confident about buying a home – a feeling due, in part, to less anxiety surrounding employment and the state of the economy.
That being said, many of those confident young people feel the way they do thanks to a little help from their friends (well, family): 35% said they were getting help with their down payment thanks to family generosity. If you’re going to be taking care of this financial commitment all on your own, here’s how to save up for what you really want: a home to call your own.
Know the basics
There are certain rules and guidelines in place for homebuyers in Canada. For example, did you know that the minimum down payment could be just 5% on a home that costs less than $500,000? Make sure to do your research, and when you get to the browsing stage, use this handy mortgage and down payment calculator to lay out the dollars and cents of each individual property in a thorough and informative manner.
Lay out your finances
While it’s easier to pretend that some frivolous purchases never happened (think online shopping splurges or buying lunch multiple times a week), your bank balance would beg to differ. When you’re saving for a down payment, it’s time to start taking every penny seriously – and that means building out a budget. Just like the “calories in, calories out” method of dieting, to put it simply, saving money is as easy as making sure that your “dollars in” (or income) amounts to more than “dollars out” (spending).
Pay off your other debt first
When you apply for a mortgage, you want to stack the odds in your favour – and if you have too much consumer debt, you might be turned away. In that same vein, be diligent about paying off your monthly credit card statement: a not-so-good credit score is also a red flag to mortgage lenders.
Understand how far your dollar goes
The kind of house you buy is entirely dependent on where your priorities lie. If your main goal is to live close to friends and family in a more expensive city, you may need to make concessions about the size and location of your home. But if you’re willing to explore new frontiers, it’s important to understand how far your dollar goes province by province. You might come across a hidden gem or two!