In order to save for a down payment in the very hot Toronto real estate market, it would look like you'd have to eat Spam for the entire year, work double shifts all week and live in your parents' basement. At least, this is what it looks like to first-time homebuyers in today's market.
With the average home price in Toronto sitting at $780,000 (according to CityNews) and the Canadian government implementing a new 10 percent down payment rule, it can seem near impossible for potential homeowners to even get their foot in the market. This has many wondering how so many millennials today – known for their high student loan debts, paucity of employment opportunities and lavish spending ways – are even able to afford such exorbitant housing costs.
Don't give up hope! There are plenty of ways to save for a down payment, even if it's for a $1 million Toronto home. You just have to make some sacrifices, live within your means and try to ramp up your income. When you do this then you can achieve the Canadian Dream.
Here are five ways to save for a down payment in the hot Toronto real estate market:
Downsizing Your Residence
Housing costs will always be your No. 1 budgetary item in your adult life. Financial experts say that the rule of thumb is having your rent or mortgage payments represent one-third of your monthly expenses. But when you're trying to save for a $50,000, $80,000 or $100,000 then you have to scrape up any savings you can find. And this could include downsizing your residence.
Here are several things you can do to save on your residential costs:
- Move back in with your parents in a room or in the basement.
- Relocate to a bachelor in a cheaper neighbourhood.
- Try to find inexpensive basement apartment options.
- Locate a roommate for your two- or three-bedroom apartment.
These are some of the ways that you can lower your monthly housing expenses.
Stop Paying for Lunch
The average professional in the city can't seem to fathom one simple concept: brown bag.
That's right. Because of our perceived sloth and all of the fun, exciting and tasty food options all around us in the big city, we refrain from preparing our own lunch and bringing it to work. But why not? By bringing your own lunch, you can save at least $10 a day, which is $50 a week, $200 a month and $2,400 a year. That's a lot of money when you want a down payment.
Oh, and the same line of thinking can be applied to that morning latte. Just bring coffee from home and save yourself $5 a day.
You Want a Pet at This Time?
Let's face it: there are so many cats and dogs in need in this city. It's hard to turn a blind eye to these lovable companion and you have the income and responsible nature to take care of them.
However, at the same time, pets can be an immense expense. You have to pay for food, visits to the veterinarian, toys and the list goes on. This is money that can be going to your down payment. Perhaps once you move in to your home then you can afford to get a cat or a dog.
Cut the Cord
Yep, we went there! In today's era of Netflix, high-speed Internet and smartphones, there is just no need for anyone to have cable. We also can't forget to mention the fact that cable television is very expensive to have. You're pretty much spending about $100 a month to watch commercials. Cable TV is not a need and it's a waste of time and money. Cut the cord and get Netflix (or read).
Limit Your Restaurant Visits
We all know that young adults love to eat out, spend time with friends and drink expensive alcohol. But this is a costly lifestyle to lead.
Every time you're going out to a restaurant, you're essentially spending one or two week's worth of groceries. This is a lot of money to be throwing away. Rather than maintaining a la dee da lifestyle, try to limit your restaurant visits to once a month, buy your alcohol at the local LCBO and spend time with your friends at home.
This advice can also be allocated to trips to the cinema, vacations, sporting events and concerts.
When you're looking to purchase an expensive home in Leaside, Forest Hill, High Park, Willowdale or Habourfront then you certainly have no business is buying daily lattes from Starbucks, going out to eat every week and/or throwing $100 every month on cable.
The Toronto real estate market is hot and if you're itching to get it into the rush then you will need to curtail your spending, modify your habits and morph into a saver. Your down payment will only go up so be sure that you can afford it and you're ready to go. If you need more professional advice, it may be wise to consult with a real estate agent at Slavens & Associates for further assistance. Good luck!