When Krystal Yee finished college and entered the workforce, she set a goal much like many other graduates: find a way to save enough to buy a home.
Yee, who lives in Vancouver, said her career in marketing and as a personal finance blogger were only landing her an average of $44,000 a year.
The benchmark price for a detached property in Vancouver was $901,680 at the time and apartments were going for about $405,200.
Yee didnB次元官网网址檛 let the conditions intimidate her. She crafted a plan and in 2011, at the age of 28, nabbed a one-bedroom townhouse about 25 minutes from VancouverB次元官网网址檚 downtown core in New Westminster.
The first step Yee took was working out how much she would need to save for a down payment. She used listings and the local real estate board to learn about average home prices and then turned to a series of online calculators to help her calculate how much cash to stash.
The Financial Consumer Agency of Canada says the minimum amount youB次元官网网址檒l need to save for a down payment if you plan to spend $500,000 or less on a home is five per cent of the purchase price.
If the home you want to buy costs between $500,000 and $1 million, the agency says to save five per cent of the first $500,000 of the purchase price and 10 per cent for the portion above $500,000.
If you intend on shelling out more than $1 million, use 20 per cent as your ballpark savings rate, the agency recommends. It also warns that if youB次元官网网址檙e self-employed or have a poor credit history, you may be required to provide a larger down payment.
Before you even consider buying a home, Yee says itB次元官网网址檚 important to manage your debt. When she was thinking of purchasing a place, she had $20,000 in debt, so she started living even more frugally and taking on gigs whenever she could.
B次元官网网址淚 did that through working two full-time jobs and a bunch of part-time jobs and really made that my focus,B次元官网网址� she said.
Some of the work was unglamorous, she admits, and only paid between $8 and $10 an hour, but it added up and within a year, she was debt-free. Looking for freelance work and selling odds and ends online helped too.
Savers may also be lucky enough to receive help from family members.
B次元官网网址淚 personally didnB次元官网网址檛 get any help with my down payment, but if my parents had offered, I probably wouldnB次元官网网址檛 have said no, but I also donB次元官网网址檛 think that it should be expected,B次元官网网址� she said.
Yee used a method that she calls B次元官网网址渂uilding your budget backwards.B次元官网网址�
She worked out that she wanted to buy a home within three to five years and divided up the cost of her ideal home to calculate what she thought she could save every month. Then, she subtracted the monthly rate from her budget before calculating how much sheB次元官网网址檇 spend on rent, bills, groceries and other things.
Some people, she said, might do this calculation and realize they donB次元官网网址檛 have enough to live on.
If that happens to you, she said you must decide whether to save at a slower rate, look at more affordable homes or in areas like suburbs where prices can be lower, or find ways to increase your earnings.
B次元官网网址淪ome months I made that goal and some months I didnB次元官网网址檛,B次元官网网址� she admitted.
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Yee recommends anyone looking at saving for their first down payment take advantage of the home buyerB次元官网网址檚 plan, which allows you to withdraw up to $35,000 from your registered retirement savings plan to buy or build a home and gives you 15 years to repay the amount you took out.
She used the plan in connection with her tax returns to build up a stash of cash B次元官网网址� and itB次元官网网址檚 a method she suggests others mimic.
B次元官网网址淎ll the money I was saving for my down payment, I would put into my RRSPs, and then with the tax return, I would reinvest in my RRSPs,B次元官网网址� she said.
Tara Deschamps, The Canadian Press
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