What can you do to get money for a down payment? Depending on the house you want to buy, your down payment may easily get to 300,000 to 400,000 dollars now that the average price of a detached house is about 2.5 million and the average price of a condominium in is 2.9 million. And if that’s not enough, if house prices continue to rise by 10 percent per year, you will need an additional 40,000 to 50,000 per year to for the deposit.
We have previously blogged about how to save on car insurance. Today, we want to look at how you can save on buying a condo. Some of the tips we cover in this post include:
- Set clear savings goals
- Put up an automatic monthly transfer
- Reduce fixed costs
- Encourage each other if you are saving with your partner
- Try to get reasonable return on saving money but also to be prepared to choose a simpler accommodation than you may have previously thought.
Many readers of our blog have been asking how they can save for a home down payment. We have put together some concrete tips that will help anyone trying to save up for the first payment. If you have more tips, feel free to add them either in the comments or via Facebook. Let’s get started.
Get rid of the thought that you cannot save for down payment
- You can opt to be stingy with your expenses and scrape together the down payment for a few years. When you know you are only saving for a few years, then it feels OK.
- Most people who fail to save for down payment compare themselves to others. They believe that “all other” people can afford to both save for the down payment and go on expensive vacations but not hem. However, what is really needed is prioritizing finances and eliminating expensive things to save more each month.
- Saving for down payment is not impossible. It’s about prioritizing savings. For example, if you save 700 dollars a month together with your partner, that will be 42,000 USD in five years.
The tough spending prioritizing
- Plan well and monitor where the money goes.
- Sacrifice holidays abroad.
- Reduce monthly cost of TV, broadband and telephone subscriptions, insurance, subscriptions, travel, cars and everything else.
- Prioritize spending on basic things and eliminate spending on unnecessary things.
- It is easier to achieve your saving goals when there’s to two of you saving. For example, if you get 2,000 after tax, set $400 for fixed expenses (and let your partner put the same amount). You will have about $500 for the other expenses and this will leave you with about $1000 to save per month. Your partner can save about the same amount.
- You do not always want to pay for costly things. Seeing movies and sports with friends on TV or bike / jog / swim / sunbathing / socializing can help you save.
- Try to find cheaper alternatives for the things that usually cost money. This will help you save.
Pull down the ambitions
- If you can, move a few miles from the city to get you expenses down to reasonable levels. You can stay in a smaller municipality from where you can easily get to the city center than many who live in the outskirts of the city.
- Focus on buying a relatively cheap, old house that you can maybe trade up us eventually.
- Most people start thinking about buying a house too late, when they are over 30, have young children and reduced salary. You can start with a small worn summer house that you can renovate and expand. Think out of the box; look for ugly houses that nobody wants.
Buy cheaper and makes changes along the way
- Choose a house in an area you like. You may actually have put down more for a house if you want to buy in a specific area.
- Buy an ugly house that you can renovate to get it the way you want. (Your first home does not exactly need to be disgusting…but it’s up to you to decide)
- Mom and Dad can loan you money. (though it’s not always possible)
- Do not buy a condo in the city. The condos here are very expensive
- Borrow a portion of the down payment and pay off the loan quickly. You should have a permanent job. The normal salary and can handle pretty tough amortization.