Working with a mortgage broker is a different experience than working with a bank specialist. It’s also a different part of the home buying process compared to working with your Realtor. Some people may have never worked with a mortgage broker before and don’t know what to expect. Because of that, there are some questions…Read Article
6 Budgeting Tips for Savings for a Second Property/Home
Have you been toying with the idea of buying a second property? If you have, the thought of budgeting and money has probably crossed your mind. In this article, I’ll share 6 budgeting tips to help save for a second property.
Is it possible to buy a second home?
Before you start saving up, it’s important to figure out if it’s even possible to purchase a second property. I wrote a full article about buying a second property that you can read! In it I discuss buying a second home with 5% down, renting out your first and living in your new home and how exactly you can afford this purchase.
Now that you’re all caught up on that information, let’s dive into some budgeting tips!
Set up a budget and saving strategy …. And follow it!
Okay, the first tip is the most likely tip and the most important one. In order to save for a second property, you have to be able to afford a second property. To do that, you have to set up a budget and a saving strategy and actually follow it!
If you’re purchasing the home alone, take some time to review your bank statements. Decide how much extra you’re able to save each month and make a plan to save it. If you’re purchasing the home with someone else, do the same thing but with both of your accounts.
Reduce expenses and don’t get new ones
While you’re looking at your bank statements and deciding on your savings plan, take a look at your current expenses. Do you pay for an app you no longer use? Is there a way to reduce your grocery expenses by not buying a coffee out every morning or pizza every friday night?
While you are saving for your second property, you will most likely have to make some sacrifices around money. It can be hard, but it will be so worth it when you see all the money you’re saving for your property.
On this note, it’s important that you do not add any new expenses during the saving and especially the mortgage approval phase. When you add a new expense, like a new truck, your debt to income ratio will change and could affect your mortgage approval.
So, while you’re saving for your home, try to be frugal, live life as simply as you can without adding big expenses into your monthly dues.
Automate your savings
Now that you know how much you’re planning to save each month, it’s time to automate your savings! You can create a separate account where you automatically deposit money into it every month. This account then can be used towards your down payment or other home expenses if your down payment comes from somewhere else.
Save your bonuses or raises
The next tip I have is to save your bonuses and any raises you get at work. While it may be nice to treat yourself to something when you get a bonus or a raise, put it towards your second property.
I would suggest putting the full lump sum of your bonus into the account we discussed earlier. And if you get a raise, calculate what amount of additional money you will get on your pay each cheque and put that amount to go into that savings account as well.
Essentially, no matter the added money, continue living your life as best as you can the current way you’re doing it.
Remove a bad habit
Do you have a bad habit you would remove to help with saving for your next home? Whether it’s that $7 Starbucks coffee on school drop off mornings or the glass of wine at the restaurant, start to get creative on ways to save money.
Stretch your dollar
The final budgeting tip I have for saving for your next property is to stretch your dollar. While you may think a couple of dollars here and there don’t matter, every dollar really adds up! So, there are many ways you can stretch your dollar. If you can buy in bulk, do that. If you can grow your own food, do that! If you can buy your kids secondhand clothing instead of new, do that! If you can make your coffee at home, do that!
Try to stretch your dollar as best as you can for as long as you can. You may even go on a spending freeze for a while to save even more! Take one month and commit to not going out for meals. Another month may be no to-go coffees.
Consider your life, how you live it and what ways you’re able to stretch your dollar.
Reach out to me when you’re ready.
I hope these fun budgeting tips help you get more creative when it comes to money. If you’re ready to learn more about purchasing a second property, reach out to me today. I will go over your situation and work on getting you approved for a mortgage with the best possible rate.
You can get started by filling out my pre-approval application on my website, replying to the blog post with the form below or giving me a call at 250-826-3111. I look forward to hearing from you and helping you get a mortgage in Kelowna!