This is the worst time for entry-level homebuyers to enter the property market. The house prices are too high, the relatively steep cost of living is another burden and the salaries can’t keep up. Without any help your family, you could be renting for the rest of your life.
Fortunately, your loved ones—particularly your parents—could play a huge role. According to Ashbury Armstrong Creek, they can to help you afford the most desirable Grovedale and Waurn Ponds houses for sale, which are otherwise out of your reach.
There are three ways mum and dad can help you:
Acting as Your Guarantor
If your parents agree to serve as your guarantor, you could get a mortgage with 100% financing. In this financial product, the equity built on the guarantor’s property would be used to substitute for the deposit. That specified amount would be considered the second guarantee on your loan—after the property you’d buy.
This option, however, exposes the guarantor to tons of risks. It’s best for your parents to put a lot of thought on it first to ensure they’re fully aware of all the financial implications this setup involves.
Providing You Monetary Gifts
If your parents don’t want to be directly involved in your home loan, they could instead provide you some funds as a gift. The money could be of great help, especially in terms of increasing the size of your deposit.
However, such gifts are not considered as genuine savings. This means you must still come up with legitimate savings in your bank account that’s worth at least 5% of the property’s sale price. The gift can only be used as an additional fund.
Loaning You a Deposit
A Parent Assist loan is one way to formally borrow the deposit from your parents without needing to save legitimate funds for a long period. This may involve some interest, but it cut the wait for you to buy a house.
As a first-time buyer, you’re still eligible to get First Home Owner Grant and stamp duty concessions by getting this type of loan.
You have plenty of options to make your first home purchase a bit more affordable. Each one has unique benefits and downsides too, so weigh everything to know which one makes the most sense to your situation.