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News
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Are your children having trouble purchasing a first home?
By Peter Roderick
A 2004 national wide survey confirmed that the big dream for 40% of Australian parents is to ensure their children are happy and financially secure. The favoured way to do this is to assist their children with purchasing a home of their own.
An increasing number of lenders are offering loan options for parents to assist their children to buy their first home. There are only two pre-requisites. The first is that you will need to have reasonable equity in your family home to pledge as collateral security. The second is that you may need to have a moderate income.
Once your son or daughter finds a home they would like to purchase, he or she applies for a home loan and still receives the First Home Owners Grant of $7,000 to cover purchase costs.
As a parent, you can provide a guarantee for either income support, security support or both income and security support. If your child has "genuine" savings of 5% then the guarantee can be limited to 20% of the loan amount. If the child does not have their own savings they can 'tap into" your home equity.
After approximately one year or as soon as there is 10% equity in the home your son or daughter may be able to take over the loan in his or her own name, releasing you and your home from the guarantee. This is dependent upon their ability to afford the repayments on their own.
Peter Roderick is a mortgage specialist and Director of Refund Home Loans Beechmont. For more information, articles, news, tools and valuable resources on home or investment loan, refinancing, debt solutions, visit this site: http://www.refundhomeloans.com.au or email peterroderick@refundhomeloans.com.au to register for our free monthly newsletter
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