Helping your children buy property
Every parent dearly loves their children, and when there is a chance to give them a headstart, they will take it. Several first-time property buyers find it difficult to get a foothold within the market. As a result, parents are helping their children acquire their first property. If you are a parent looking to achieve this, here is how:
Hand them a deposit: One of the best ways for parents to support their children in getting their first property is to gift them the money to be used as a deposit. However, some lenders are concerned with borrowers having a great savings history before securing a mortgage. Hence, the deposit can be banked for three to six months to improve the credibility of the deposit to pass as genuine savings. Even though some traditional lenders do not prefer gifted deposits, it is an option that can be explored.
Offer a family guarantee: Parents can use the equity of their present home as a deposit or guarantee for their child’s new property. This strategy is vital in getting rid of the cost of expensive lenders’ Mortgage Insurance. To your surprise, the lender’s mortgage insurance is applicable when the loan is 80% of the property’s value. With the property’s equity serving as a security for the loan, the LMI can be avoided. If the property appreciates, the loan terms can be revisited.
Get the house together: Buying a house with your child is the easiest option to help your child get a property in Australia. This approach improves their chances of acquiring credit or finance. It also implies that the stamp duty commitments and the deposits can be shared between all the parties involved. Although some borrowers might not want to consider parents since they are approaching retirement, several others will.
Allow your children to stay at home for longer: With adulthood comes a sudden rush for independence, which has driven many young adults out of their parent’s homes. In recent times, the narrative is changing. Children stay with their parents for longer, until they are in their 30s and sometimes 40s. Offering your children this opportunity will help them develop a plan and consolidate Dubai their property faster.
For instance, you demand board payment for your children to teach them responsibility and set some apart for their savings. The art of doing this is known as boardvesting, as it allows younger people to stay in their parent’s houses to save up to afford their first property.
Teach them Early: Teaching your children about the importance of real estate and investment is vital to helping them acquire their first property early. As a parent, you must teach them the value of money and introduce them to the concept of saving from a tender age. Simple practices such as using a piggy bank and saving part of their pocket money and cash gifts can go a long way in cultivating these important habits.
Helping your child acquire their first property is a truly wonderful experience; with these tips, yours could be on their way.