Making a down payment on a new condo is no small financial matter. Given the generally high price of property these days, as well as some of the hidden costs that can be associated with newer condos, the down payment alone can be a significant investment. That being said, with a little bit of preparation you can put yourself in a better position to afford to start payments on the condo you want. Here are five ways to start saving for this particular financial goal.
1. Use Tax-Free Savings
If you’re only just beginning to think about buying a new condo, there’s something to be said for putting some money aside in a tax-free savings account. This kind of account will help your money to mature over time without burdening you with income tax on the appreciation. We’ll note that said appreciation is usually somewhat modest, particularly over a relatively short period of time. Nevertheless, if you have a chunk of money you can set aside and you’re beginning to consider a condo, there’s no sense not setting that money up to grow. In time it will be closer to what you need for your down payment.
2. Pay Credit Card Debt
This tip does not concern direct savings, but it’s still an idea many will benefit from when considering this kind of expense. The idea is simply that by paying off credit cards you’re eliminating more interest fees from your life — and thus freeing up more cash you can direct elsewhere. Not all expenses can be handled this way, but where credit card debt is concerned you can actually increase the availability of your own wealth by knocking off amounts owed and eliminating interest. It can take some time, but clearing even one card will give you more flexibility to save for a condo down payment.
3. Invest Professionally
Some will choose to invest small amounts of money in order to raise funds for a down payment — essentially as a version of the savings account idea with a little bit more potential for meaningful gains. If you do decide to try to raise the money through investment though, it’s important to do so professionally. That is to say, the strategic option is to set yourself up with a brokerage company and trade through a professional platform, rather than trust a new app or alternative market with your money. While these options can be perfectly fine, they’re a little less tried-and-true than regular investment brokerages, and can thus make things more difficult for you. With a brokerage account you’ll be able to securely deposit your money, make trading decisions, and efficiently withdraw any returns you earn.
4. Borrow From Your Retirement
Borrowing from a retirement fund is not an ideal option, because it typically means that you’ll stop the appreciation of the money you take out. Replacing the money will mean putting the whole amount back in, rather than just what you initially put in before it appreciated. Nevertheless, if you need money for a condo down payment and you have it in your retirement account, it’s at least one avenue you can consider. Just remember to be diligent about replacing the funds so that you don’t significantly deplete your retirement savings.
5. Find & Consolidate Easy Savings
As simple as it may be, the most effective way to save up for a down payment on your new condo may ultimately be to find everyday savings opportunities. From setting up a budgeting app, to canceling unused subscriptions, to trying a meal-prep service, you may well be a able to start saving a significant amount of money. You might even supplement your savings by biking somewhere you might ordinarily drive, or drinking more water instead of stopping for coffee. There are all sorts of solutions, and if you approach them diligently and consolidate the savings, you may have the beginnings of your down payment quite quickly.
Putting a down payment on a condo is a serious financial commitment, and can be an expensive one. We hope this helps to convey, however, that there are a lot of ways to generate the savings you need to make the payment with as little hassle as possible.