Get a free, no obligation personal loan quote with rates as low as 6.99%
Get Started You can apply with no effect to your credit score

The prospect of buying a home after getting your university or college degree may seem impossible, especially if you still have student loans to pay off. It can be difficult to manage expenses, pay off your student debts, save up for a down payment and then take on more debt in the form of a mortgage. Studies are showing that the outlook isn’t looking too good for Canadian university or college graduates looking into home ownership. Many graduates might just take the easy way out and stick to renting an apartment, however, in some cases mortgage payments may not be any more expensive than rental costs, and even if they are, the reward of home ownership can be very well worth it. With some careful planning and self-discipline, it is not at all impossible to save up for a home within a reasonable amount of time.

Looking at the Numbers

Presently, the average cost of a home in Canada is about $300,000. In 2020, it is projected to increase to a whopping $550,000. Let’s assume an average starting salary of $40,000 per year, of which 5% is directed to savings, with 3% interest earned on those savings, and a salary increase of 3% per year. The student loan is estimated at about $28,000 with 3% interest. In this case, the average Canadian university graduate can expect to save up for a 5% down payment within 12 years, and pay off their student debt within 14 years. In the case of a 10% down payment, this will take 21 years. Due to lesser tuition costs, college graduates are projected to take 6 years to pay off their student debts, 10 years to accumulate a 5% down payment, and 18 years for a 10% down payment. Assuming a mortgage term length of 25 years, this means graduates can expect to own their homes and be debt-free within 35 to 46 years.

What Can You Do to Save?

With the above numbers in mind, it can be very disheartening to imagine paying mortgage payments up until retirement. So how can you avoid this? The answer is quite simple: increase income, decrease expenses, and put the largest down payment possible.

The most important thing you can do to save money is budgeting. Small daily expenses can add up, and for the most part, can be substituted with cheaper alternatives, such as making coffee at home rather than buying coffee out. You have to manage your monthly expenses and list them out to see where cuts can be made. Taking on an extra job or working overtime will earn you more money and give you less free time to spend.

If you have student or consumer debts, you can transfer them over into a low-interest line of credit, or a low-interest credit card with a 0% balance transfer credit rate. It’s important to consolidate your debt as much possible and prioritize your debt from there, where you begin paying off the debt with higher interest first. This will save you money and time.

Lastly, look into federal, provincial, and municipal incentives for home ownership, such as the First Time Home Buyer’s Tax Credit (HBTC), or the Home Buyer’s Plan (HBP) which can help you get closer to making that down payment.

For more information on mortgages, click here.

Caitlin Wood avatar on Loans Canada
Caitlin Wood

Caitlin Wood is the Editor-in-Chief at Loans Canada and specializes in personal finance. She is a graduate of Dawson College and Concordia University and has been working in the personal finance industry for over eight years. Caitlin has covered various subjects such as debt, credit, and loans. Her work has been published on Zoocasa, GoDaddy, and deBanked. She believes that education and knowledge are the two most important factors in the creation of healthy financial habits. She also believes that openly discussing money and credit, and the responsibilities that come with them can lead to better decisions and a greater sense of financial security.

More From This Author

Special Offers

More From Our Experts
Canada Fed Deposit: Payment Dates And Eligibility 2023

By Corrina Murdoch
Published on September 20, 2023

The Canada Fed Deposit or EFT Credit Canada appears on a bank statement. It happens when the federal government pays the CCB, CWB and
The Best Paying Jobs With The Government: No Degree Required

By Lisa Rennie

Are you looking for a high paying job but don't have a degree? Check out the CBSA salary and other government jobs.
Neo Credit | Neo Financial Credit Card Review

By Corrina Murdoch

The Neo Financial Credit Card makes both spending and saving rewarding for Canadian consumers, regardless of their financial health.
Alternative Mortgage Financing In 2023

By Bryan Daly

Alternative lenders can provide all Canadians with the opportunity to become homeowners, keep reading to learn how they can help you too.
Home Equity Line Of Credit vs. Private Second Mortgage

By Lisa Rennie

If you're a homeowner needing a loan, consider tapping into your home equity. Even with bad credit, you can get a private second mortgage.
Find Out How You Can Get Free Legal Advice With Pro Bono Ontario

By Lisa Rennie

Lawyers aren't cheap, and many Canadians aren't able to afford their services. Check out Pro Bono Ontario for free legal guidance.
Can You Get Jobs That Pay Cash In Canada?

By Savanna Craig

Whether you're looking for jobs that pay cash or have a job that pays cash, it's important to understand your rights and obligations.
Best Credit Cards To Build Credit 2023

By Lisa Rennie

The top credit building credit cards available to Canadian consumers looking to improve their credit score.

Recognized As One Of Canada's Top Growing Companies

Loans Canada, the country's original loan comparison platform, is proud to be recognized as one of Canada's fastest growing companies by The Globe and Mail!

Read More

Why choose Loans Canada?

Apply Once &
Get Multiple Offers
Save Time
And Money
Get Your Free
Credit Score
Expert Tips
And Advice

Build Credit For Just $10/Month

With KOHO's prepaid card you can build a better credit score for just $10/month.

Koho Prepaid Credit Card