Quoted in NRMA magazine – Helping the kids out
My contribution to this article was on how parents can help out children get into the property market. As I provide financial advice to younger Sydney couples that are either looking to enter the property and also to Sydney couples who are looking to retire, I see both sides of the story.
My younger clients are concerned that they may not ever be able to purchase a property whilst my older clients are concerned that they may not have enough money for retirement, particularly if they assist their children with a property purchase.
A possible solution – use a family guarantee. The family guarantee is just that, the parents will guarantee a sum of money in-lieu of an actual cash deposit. This helps the children as the guarantee is counted towards the deposit and it doesn’t impact the parents as there is no exchange of cash, although the parents carry the risk that the bank will chase them if the children default on the loan.
Some banks will allow family guarantees for the bulk of the deposit however even the most generous lenders will usually want to see the borrowers have about 5% genuine cash savings.
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