Non-financial ways to help
As a parent you may feel inclined to help your children financially, but not all assistance has to come in the form of a cash handout. Other ways to help could include:
- Teach good budgeting and savings habits
- Suggest your kids look into their credit record
- Let them live under your roof while they save
- Get them up to speed with the real cost of buying property
Your kids could also save a significant amount of money over the long term by understanding types of home loans, comparison rates and key considerations should they buy an investment property.
- Help them explore government assistance options
Financial ways you can help
Lenders will generally ask for a minimum deposit of between 10% and 20%. Some lenders may offer your children finance without this if a family member pays the deposit, signs as guarantor or buys the property as a co-owner or joint borrower. Here are some details on these options:
- Gifting the deposit
Bear in mind, if you happen to receive Centrelink payments, you’ll need to consider that a gift of this nature could impact your benefits.
- Signing as a guarantor
Going guarantor requires a lot of thought because if things don’t go to plan, the loan becomes your responsibility and you may have to sell your own home in the process to clear your child’s debt.
- Going in as a joint borrower
This is also a big commitment and you’ll need to understand the risks and get the right advice.
If you’re going to give money to your children, it may be a good idea to discuss early on how and when the money will be provided, and when and if you want the money back.
Likewise, if you’re providing non-financial support, make it clear on what terms support will be provided.
Having an agreement in place can go a long way to ensuring everyone is on the same page and you may even consider writing down what you’ve agreed to so there are ground rules in place.
Meanwhile, if the support you plan to provide will be financial, you may want to speak with one of Our Advisors so you’re aware of the risks, benefits and any tax implications.