GUARANTEE YOUR KIDS, AND GET THEM OFF YOUR COUCH!

Many parents get just as excited about their children’s first home purchase as the kids themselves and are often involved in helping select the property and providing advice.

But with the rising costs of purchasing a property, is there an easier way to get your millennials off the couch and into their own home? You bet there is – and we can help!

A Family Guarantee Loan enables parents, or another immediate family member, to use their own home as additional security for up to 20% of the new home value.
If this suits your circumstances, you’re one step closer to an empty nest.

What this means to your millennial

• They may be able to afford a property that better suits their needs.
• It may enable them to purchase without the entire deposit saved or if they are short on the extra costs associated with buying a home.
• It could remove the need to pay costly mortgage insurance (usually required when borrowing greater than 80% of the purchase price).
• They are still eligible for the relevant First Home Owners Grant.
• They still need to show the bank that they can repay the mortgage without you.
• Your liability is limited to 20% of the purchase price and will be reduced as the loan is reduced.

How do you remove the family guarantee?

You can release the guarantee once your kids have reduced the loan amount secured by the guarantee — you won’t be liable forever!

What if they default on the loan?

If something goes wrong – the bank sells the kids place first before activating the guarantee. And even if this did happen your liability is limited to what you contributed, NOT the full house.

These loans can be a great way for families to help each other when just getting started. As with any loan there are risks, so if you’re keen to get your kids of the couch and into their first home, contact us today!

Sources:
http://www.yourmortgage.com.au/article/how-to-help-your-kids-get-into-property-family-guarantees-82387.aspx