Buying a home is something that just seems out of reach for so many young people. As their parent, you may be in the very fortunate position to be able to help them.
What’s the best way to help?
That depends on both yours and their financial position, so here are some ideas:
- Coaching and educating – the earlier the better! The younger they learn about saving, responsible spending and investing, the greater their chance of having a secure financial future.
- Provide incentives – if you are in a position to do so, you could match their deposit savings. If they save $100K for their deposit, you could match it with $100K of your savings.
- Offer rent free living – or charge them board, but bank it into a savings account they can’t withdraw from. Paying rent while saving is often a huge challenge, so this would give them some breathing space – but make sure the money they would be spending on rent is actually being banked!
- Lending or gifting them a deposit – you’ll help them get their start, but the mortgage is their responsibility.
- Encourage them to become Rentvestors – buying an investment property in a cheaper, more affordable location so they can get their foot on the property ladder. This takes some research to find a location that has strong capital growth and high rental demand and yield, but it’s a great option.
- Enter a joint venture, buying a property together. Make sure you have clear terms and a written agreement covering all the bases like who pays for maintenance, what happens if one can’t pay and exit plan.
- You could act as guarantor for their loan. They would need to have a deposit saved and be eligible for a loan. You would just be signing that if they default on payments, it would become your responsibility.
Helping your children buy property could be the greatest gift you ever give them, as long as it doesn’t jeopardise your financial security.
