Getting into your first home can be a challenge for many young people and with more young Australian’s living with mum and dad for longer, many parents’ want to provide financial assistance to help their kids buy their first home. If this sounds like you, then the best thing you can do is to encourage your kids to start saving early so that they will be more financially prepared when the time comes for them to make it on their own. There are options available to assist with their deposit when they are ready to purchase their first home. Here are some tips to help you do that:
1. Encourage them to save
When the time comes for your kids to buy a house of their own, lenders will be looking for genuine savings and a sufficient deposit to be eligible for a home loan. It can be difficult to save up a sufficient deposit for a home loan, especially if you do this a little later in your life. It’s a great idea to encourage your children to save money while they’re still young. This will teach them many valuable lessons including being financially responsible and how to plan ahead.
2. Assist with their deposit
If you are in the enviable position of being able to gift the necessary deposit to your kids, then this is a great way to get them started. Note that lenders will require that a borrower shows “genuine savings”. So, your “gift” will need to be deposited into a bank held in the name of your kids’ and held there for a minimum period of six months, to evidence genuine savings to the lender.
3. Act as a Guarantor for their home loan
If, like many, you can’t just gift the deposit to your kids, you may have equity in your home that you can use to assist them with their deposit. Speak to one of our brokers today to find out more about guarantor loans and what’s involved in using the existing equity in your home as the deposit for your kids’ first property purchase.
Why Savings are Important
Your children’s savings aren’t just there to help secure their future. It also helps to develop financial discipline and responsibility. This will make your kid’s future mortgage application more likely to be successful with lenders.
If you or someone you know would like to know more about purchasing their first home, get in touch with us today.