The kids have been saving and saving to get on the property ladder, but things keep getting away from them – how do you help?
Paying rent is seriously limiting your daughter’s ability to save for a home deposit – is there anything you can do?
Thankfully, many people in their 40s and 50s are in a position to help their kids get a home loan by allowing them to tap into the equity in their own home.
These loans are known as ‘family guarantee’ loans and can give the kids a considerable leg-up.
Typically they work by the kids borrowing up to 80 per cent of the property value against the home they are buying and then they borrow the remaining 20 per cent against their parents’ home; sometime they can even borrow things like stamp duty etc.
No matter what, the loans have to be in the kids’ names – and they have to be able to demonstrate that they can afford to make the repayments.
And the parents have to offer a guarantee so that, if there is a default, the bank can recoup all the money lent. But, from my experience, the kids normally focus on paying-off the loan against the parents’ property as soon as possible.
Family guarantee loans are one of the few that can leave all parties with a sense of satisfaction.
Parents feel pleasure that they are helping the kids out. And the kids don’t have to fork out on Lenders Mortgage Insurance; plus they typically get lower interest rates.
Parental guarantee loans are quite complicated to put together – but the solution they offer first time buyers is pretty powerful.
For a no-obligations consultation on how to help first home buyers, please contact Graeme on 02 9922 5055