6 Tips For Saving Money On Your Home Purchase

This is a guest post from a reader, Margie Baker.

Buying a home is a big decision. It is one of the most expensive purchases you will ever make.

There are many ways to save money on this purchase that you may not have considered.

Here are a few:

1. Shop around

Go to your bank, as well as seeing a mortgage broker for a pre-approval.

While brokers are able to shop around to numerous lenders to get you the lowest interest rate, also going to see your bank is beneficial.

In some cases, your bank may be able to give you a lower rate based on your relationship as a client.

At the end of the day, the lowest interest rate is what will save you the most money overall, so shop around to find the best price.

2. Hire a realtor.

Typically the seller pays both the buyer’s and seller’s side of commission; which means when buying a home you won’t have to pay to utilize the services of an experienced agent.

So, you might as well hire an agent to look out for your best interests – especially if their services won’t cost you anything.

3. Learn to compromise.

Make a list of your needs and wants in a new home. Oftentimes, these 2 categories get confused and many wants end up in the needs column.

Is having an ensuite bathroom a must have or a nice luxury? Is not having a finished basement a deal breaker?

Consider saving up and doing certain renovations yourself. This will save you the cost of labor, as well as money on your mortgage.

Another money saving compromise is location. You might be set on a particular neighborhood, but even considering a house a few blocks over could save you thousands.

Be open and willing to compromise to get the most bang for your buck.

4. Negotiate

After finding the house you want to buy, make sure to negotiate. This is one of the best ways to save money in a real estate transaction.

A seller is not always worried about the sale price – often there are other factors that they also must consider.

Many deals happen when a buyer allows the seller to choose the possession date or to take the washer and dryer.

5. Avoid paying mortgage premiums.

A mortgage premium is a fee added to the mortgage amount by a mortgage insurer, when the borrower has less than 20% saved for a down payment.

If you’ve been able to save up 25%, then these fees are waived which will save you a ton of cash.

If you currently own a home but don’t have 25% equity to apply to your next house, you can also save in this area.

Not many people know, but you can port your mortgage premium to your new house so you only end up paying the difference. This is something that must be requested on your behalf so make sure you ask your banker or broker about it when the time comes.

6. Timing is everything.

If you aren’t in a rush to own a home, then buy a house in a buyer’s market.

Typically, the best months are November and December. Most people who are selling their home in these months are doing so because they need to sell and not because they are waiting to get the best price.

This is the best time to negotiate and get a great deal.

Using even just a few of these tips will help you save on your home purchase and leave money in your pocket.

Be smart and do your homework before you buy. You will be glad you did.

Margie Baker has been a licensed realtor for Century 21 for the past 7 years. She lives in Saskatoon, SK and loves helping others save money on their home purchases.

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Comments
  1. teachermum says:

    Great information!

    Having been mortgage free though for the past 18 years I don’t know if we would ever bite the bullet again!

    I would also add to pay more often than monthly. Weekly saves the most interest but if you aren’t paid weekly or every 2 weeks, those extra payments can hurt! I’d suggest how you are paid ie we get paid twice a month so would choose to pay our mortgage that way. Amazing how much interest you can save just by doing that. Same “monthly” payment but big interest savings.

  2. Betty says:

    I second teachermum’s suggestion about the bi-weekly payments; shaves off about a couple of years off your amortization. I was also advised years ago that when you are figuring out whether you can afford your mortgage, figure out your budget as if you have to make your mortgage payments affordable if you happen to have a pay decrease, get sick & can’t work or you lose your job.

    Also as far as the budget goes for closing the deal, factor in the Land Transfer Tax which can add up pretty fast depending on where you live, shop around for what a lawyer would charge you (cold be $2,000. or more depending on the lawyer), might need a survey of your property (highly recommended so you know exactly where your property line is; saves on lawyers fees & fights with the neighbour over who owns what), mortgage insurance, etc. & probably other fees that have been added over the years (last time I bought a house was 28 yrs. ago & I’m sure there are more fees involved). You don’t want any surprises as to how much you are going to be paying.

    Hiring an inspector would be a good investment also in case there needs to be major repairs that you don’t know about or should know about (roof, leaky basement, etc.)

  3. Erica says:

    My advice: have an extra $10,000 put aside for small things you don’t think of. It will get used up, something always comes up.

  4. Gena says:

    I agree with the other posters – set aside some money for extras like land trasfer tax (which is pretty high for some), and unexpected repairs so that you’re not rushing out to get a loan to cover these costs!!

    Mortgage premiums kick in if you don’t have 20% as a down payment (not 25%) in Ontario, but the more you put down, the better!

    Great information!!

  5. teachermum says:

    Another thing, I would NEVER have a mortgage for what they would pre-approve us for. Back in 1986 (11.75% mortgage!) if I remember correctly they pr-eapproved us for $1100/month. I would have loved to ask them to make up a budget for that!!! We ended up paying just under $700/month and that was as much as I know we could have handled. Make your budget first ( including the taxes, utilities, repairs (3-5%) etc) and decide yourself what you can afford in a mortgage. Then look for a house in that price range!

    I also don’t believe it was wise at all to not require the 20% downpayment that was standard for so long. That was chosen for a reason-if you cannot save up that amount, odds are you cannot afford the housepayment longterm. Statistics have borne that out time and again.

    Land transfer tax–who’s hairbrained idea was that one!!! Someone who didn’t have to buy their own house, I bet!!!

  6. Margie says:

    Great ideas guys! I agree with you teachermum, you can definitely save money by going with biweekly payments. And I always suggest to figure out your budget beforehand and work backwards!

  7. Brian says:

    This information is badly outdated. It only take 20% down payment to avoid the Default Insurance Costs. Also, do not forget about SERVICE. I wold rather pay my bank a little bit more on rate because I can always vist my branch to ask questions. With a mortgage broker you are simply a transaction and there is no follow up service.

  8. Melissa says:

    Also do not go with the bank for mortgage insurance! You pay extremely high premiums for the term of your mortgage and you are not guaranteed that they will pay out in the event of a death. For example if you died of a heart attack and they find you had a heart murmur (you didn’t know about) they will not pay off the rest of your mortgage. You can search all the instances of banks ripping off families. Go with a private insurance company, it’s wayy cheaper and you are guaranteed your money because they usually do some form of a medical before they underwrite you! One tip I have used over the last 4 years and saved tons of $$!

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