The 2022 federal budget made way for a new tax-free savings account (TFSA) designed specifically for first-time home buyers in Canada. The account ultimately combines the advantages of the existing TFSA and registered retirement savings plan (RRSP) – popular down…
Did you know that the average cost of a home in Canada now exceeds $686,650? And in Toronto and Vancouver, they are well over $1 million. Prices have been soaring due to severe supply and demand imbalance. But buying a house is a long-term investment, either for yourself or to have a regular rental income, and is one of the largest investments most of us will make in our lifetimes.
While it is a goal of many, life and household expenses seem to be never-ending, and it is becoming increasingly difficult for Canadians to buy. In this article, we will explain some tips to make it easier to apply for a loan and realize your projects.
Saving for a down payment
Take advantage of your newly saved money by putting it in a savings account or investing in a balanced investment portfolio. If you commit to investing or saving a certain amount of your salary each month, your savings will grow steadily, without any action on your part.
When you save for a home, you should take advantage of all the tax breaks available with a TFSA. The Canadian government created the TFSA to encourage people to save for major life events like buying a home, tax-free, check out the top 10 best TFSAs in Canada.
Having a good credit score
It’s important to keep a credit score in order if you want to apply for a mortgage at a good rate, which will save you money in the long term. This can be done easily by paying all your bills on time, never exceeding your credit card limits, and staying on top of any suspicious activity on your cards or bank account. Have a look at a definitive guide to mortgages in Canada.
Increase your salary
When you attend your annual job performance review, take it seriously and be prepared. List your accomplishments and the reasons why you think you deserve a pay raise or promotion. Getting a promotion would give you more money to save and also make it easier to apply for a loan.
Also keep an eye on the job market. Don’t be afraid to move if you see a better opportunity elsewhere and you’re not getting the salary you deserve in your current job.
Reducing the cost of your rent
Rent tends to be one of the biggest monthly expenses, however saving on it is one of the quickest ways to set aside some money each month. You can make certain “arrangements” over a few years. With just your rent, you can save over $1,000 a month for your future home, and shorten the path to be an owner.
- If you live alone, you can move into a roommate and save more than half the cost of rent. If you choose to live with two roommates, you will pay one-third of your current rent.
- If you are already living in a shared apartment, consider moving to a smaller room (rents are based on the size of the room). And then sell some of your furniture because it is now useless in a smaller space, and earn a little more money.
- Alternatively, you can also move in with a friend, a parent or both by paying them half of the amount you already pay.
Take on an additional professional activity
You can be an entrepreneur in opening an online store on Etsy of handmade items according to your expertise, or driving an Uber. An increase in income also means an increase in savings.
Alternatively, it could be working a few nights at a bar or restaurant after your job or even walking dogs. Every savings is good and it can be very motivating to transfer all of your income generated by these extras directly into your savings account.
Reconsider your car
Do you really need a car? Especially right now with the crazy increase in fuel prices. In terms of transportation, you could certainly consider alternatives such as carpooling, public transportation or biking in the summer. By giving up the car, you can save over $5,000 a year. And if you sell your car, you can easily earn an extra $10,000 to put towards your home, not to mention the savings on insurance and car maintenance. And the environment will thank you!
Change your consumption habits
Identify and eliminate basic purchases that have become habitual but bring little value to your life. Cut back on things like dining out, premium coffee, items you don’t need immediately. New savers are very surprised at how much they save each month in doing this. Those savings represent almost thousands of dollars over a year. You may have hobbies and extravagant expenses at the top of your list. Once you’ve identified these categories, it’s also time to temporarily start cutting them.
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