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How to Save for a Down Payment

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September 2, 2015

Recent statistics have shown that an astounding nine out of every 10 Canadians would rather own than rent a home! The poll of more than 1,500 people commissioned last year by Genworth Canada, found that though Canadians are saving longer and working harder to purchase a home, they are also still adamant buying eventually is better than renting for eternity. Why rent something you can own, it seems, remains a question many are venturing to answer with exclamatory success!

The chief hurdle in preventing prospective buyers from watching renting woes fade into oblivion like a distant memory, however, remains the feared and fabled down payment. While preparing to purchase a home comes unquestionably with a laundry list of items to check, that task is one that cannot be started without first being able to put up enough money for your down payment. For anyone having trouble getting over this hump (sometimes a mountain), we have investigated a few ways to overcome the down payment hurdle.

The average home is priced at a whopping $406,372! In the context of even a 5% down payment, the figure reaches an intimidating five figures that can scare away any potential buyer. The reason why most renters have not yet purchased a home is simply that the price of the down payment was financially insurmountable. The first lesson to be learned here is that  IT IS NOT! Many home buyers were once in the same position as you. Be patient, be diligent and, to the best of your ability, be frugal.

Though there is no real rhyme or reason to how best to save for your down payment, the figures show that the majority believe it’s best to save quick and pay fast; short-term pain for long-term gain. A full half of Canadians save for their down payment in the first year or two after deciding on planning to buy. Roughly 30% take three to four years to save for their down payment and the rest still longer even. It stands to reason that the sooner you can pay the less you can waste on rent, and the faster you can build equity.

Needless to say, saving diligently is the lead way to ensure you overcome the down payment hurdle. But shopping for the home that fits your budget – in essence buying only what you need and nothing more – and making sure your savings are flush before moving into the mindset you will be in short time buying a home are another of the many ways to see to it your dream home becomes a reality. Good luck getting over the hurdle!

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