How to Save for your Mortgage When You’re Still Renting
Saving up for a mortgage on your future home while you’re still paying rent each month might sound like an insurmountable task. After all, how can you save up for a home while still paying hundreds (or more) each month for the place you’re currently living in?
It may take some time, but it can certainly be done if you prioritize your dreams of home ownership. With these four valuable tips, saving money for your future doesn’t have to be a tremendous hurdle. Take your time and follow the advice written out below to get set on the right path to owning your first home.
4 Tips for Saving up for your First Mortgage
Pay off your credit cards first.
Revolving credit, like credit cards and lines of credit, can be the biggest obstacle in saving for your future mortgage. If you have numerous cards or lines of credit, pay off the one with the highest interest first and work your way down to the lower-interest ones. It’s tough to save when you have debt working against you, so this is the best first step that you can take.
Ask for help
Assuming your family members own real estate and are willing to help you become a homeowner, they can put a second mortgage on the property and lend you the money.
Open a tax-free savings account.
A tax-free savings account (or TFSA) allows you to put money into the account without paying taxes on it. You can deposit money over time and then use the funds for your down payment and/or future mortgage payments.
Make a budget and stick to it.
If you’re living a life of leisure while renting your home, it’s time to scale things back a bit. Look into how much money you spend on non-essential items (essential meaning rent, utilities, bill payments, phone, and so on). Non-essentials like dining out, going to concerts and taking leisure vacations should be looked at closely and potentially nixed from the budget altogether – at least until you’ve saved up for a down payment.
Look into first-time home buyers programs.
Some cities have resources that assist first-time home buyers with their initial down payment in the form of an interest-free loan. This is an invaluable bit of help that can help you tackle one of the biggest initial costs in buying a home. If you’re unsure as to whether or not your city has such resources, call up your city call and inquire.
Saving up the money that you need might not be easy and it probably won’t happen in just a few months’ time. But if you remain diligent and focused toward your goal of owning your own home and getting out from under a renter’s agreement, you’ll be glad that you did it.