Amongst today’s economic struggles lies your children’s ability, or lack thereof, to afford their first property. Whether it be an investment property, or they feel it’s time to move out from the nest, purchasing an initial property can seem like a never-ending uphill battle – especially when you’re young!
So, what to do? How do you help out with this as a parent?
Well, there are definitely a few ways! Let’s look at our top three tips for assisting your kids with buying their first home.
1. Offer your wisdom and financial advice
Your children are always going to learn by the example you set for them. This has been determined to be a fact since the beginning of human existence. Make sure the example you lead is a positive one, demonstrating the importance of dividing up your income, and how to save up for that hefty deposit.
Sit down and run through their finances and credit history with them, discussing and offering your advice as to how to eliminate or at least reduce any outstanding debts they may still have. The first step to improving their financial position is to first thoroughly understand it. A parents’ wisdom can also be amazingly influential and motivating, and may lead to a change in spending and saving habits within your family.
2. Encourage them to stay at home a little longer
Considering that one in four Australians are reluctant to move out due to financial reasons, allowing your children to remain living at the family home well into their late 20’s is another brilliant way to let them save some extra cash. All that money that they otherwise would be spending on rent and bills can be put towards the home deposit. Depending on your family’s living situation, this can be one of the most useful ways for you to help out as parents. You’re not exactly ‘giving’ them anything, however you’re letting them understand and get used to what they need to do to achieve a financial goal.
Oftentimes you’ll find that a lot of young people have never really understood the value of a dollar, so this is generally the best way for them to learn just how far it stretches, (or doesn’t stretch for that matter).
3. Substitute the bank with yourselves
The third method of assistance is made up of lending your children the required finances directly. Without actually handing over a wad of cash, there are some alternative ways to go about this.
You could opt in as a ‘joint borrower’ with your children. This means that you, as parents, possess ownership rights to the house as much as they do. However, it also means that you’re responsible for any repayments that your children potentially may not be able to afford at some point down the road.
A safer method is to co-sign the loan as a guarantor, but much like the first option if they default, you are responsible for managing the debt.
Above all, the best and safest assistance you can offer is by giving them part of the deposit as a gift, with no ties to banks, lenders or contracts! Obviously not every family can afford to do this, however the bottom line is that there are ways you can help out, it’s simply a matter of figuring out the best method for your particular circumstances.