Helping your children buy a property
For help making the biggest decisions in their lives, your children will often turn to you for support. Buying a property is no different. While we may not all have the funds to aid our child’s property endeavours, there are a number of ways to help them along the way.
With interest rates at a record low, it can be tempting to front the deposit for your child so they can delve into a home loan while the market is ripe. Before you gift any significant amount to your child’s deposit, however, take steps to ensure they have a long term plan and are confident they can meet their repayments.
We understand not all parents can (or want to) gift their child a lump sum of money. If this is the case for you, it’s worth considering Parent Equity Home Loan, which can help your child get a home loan faster by reducing the need for a large deposit without putting you out of pocket.
This type of loan allows you to act as a guarantor for a portion of their mortgage – generally around 20 per cent – which cancels out the need for an up-front deposit from your child. So, if they can afford their repayments but are having a hard time saving the necessary money for a deposit, this can help them along their way while offering greater protection for both you and your child.
Be their advisor
When it comes to money management, you can be your child’s greatest source of inspiration. It’s likely you’re a home owner yourself, so what steps did you take to get there? Take the time to teach your child the basics, and consider:
- Do they abide by a budget?
- Do they have a money management system in place?
- Do they understand the realities of mortgage repayments?
- Are they aware of extra costs following the initial home payment, such as council rates or moving costs?
As you likely know yourself, lenders will want to see evidence that your child can meet their repayments month to month. When you are confident that they are financially fit, it could be time for them to meet with Beyond Bank Australia to discuss their first home purchase.