To quote the great philosopher, Justin Bieber, “never say never”.
No seriously, set a goal, take actions, and get there. It may seem that you will never be able to buy a house, and you might be right. If you’re not saving, researching, and actively trying to reach your goal, nothing will change.
Not everyone wants to buy a house, and that’s totally fine. You do you. But if you want to be a homeowner one day, here is what worked for me.
OPEN A Tax-Free Savings Account (TFSA) AND A Registered Retirement Savings Plan (RRSP)
You can save in both of these accounts and invest without paying taxes on the money you make on your investments. A TFSA is more flexible and you can take your money out of the account without penalties. One of the only rules is that you can’t put more than $5,500 in the account in one year. No biggie.
The RRSP is a bit trickier. It’s meant for retirement but if you are buying your first home, you can take money out without penalty. The only thing is that you have to put the same amount of money that you took out within 15 years. Taking money out, for your first home is like giving yourself a loan. There are other rules but whatever. This is the basic premise, and I should not be your sole source of financial literacy.
I opened my TFSA first and saved aggressively for 6 years. Like 50% of my income each month. It was easier when I was a student because eating noodles for dinner was cool. Eventually, I started owing taxes each tax season so someone suggested I use my RRSP. When I bought the house, I took everything out of my TFSA and 90% of the money from my RRSP. I couldn’t take all of it out because you need to have money sitting in your RRSP for at least 3 months before using it. KEEP THIS IN MIND!
Transferring money was stressful. My closing was super fast and I had to move money out of my multiple accounts and get it into one account for a bank draft.
Tip: Move your money into one account and have it ready to go when you are ready to buy a house.
Anyways, buying a house is a process and journey. The day I opened my savings accounts over 5 years ago was the start of this journey. When will your home purchase journey begin?