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Mortgage featured stories

The “Bank of Mum & Dad”

Home Finance, Mortgage Broking, Property, Tips
Share
There are many kids in Australia who have treated their parents as a ‘bank’ as they have grown up. Whether it was getting the newest game or latest technology before they had saved enough pocket money, or even as big as asking for assistance to buy a car in their late teens. But these days with the cost of housing many kids are seeking much larger withdrawals and assistance from the ‘Bank of Mum & Dad’ to help them get into property ownership.
Lets face it. It is not easy to save the money for a deposit on a house, and then there are the added purchase costs such as Stamp Duty and Transfer fees that can quickly mount up. Not to mention Lenders Mortgage Insurance if you haven’t saved enough deposit (What is Lenders Mortgage Insurance?). So how can Mum & Dad help their kids get into property ownership? There are several avenues that can be considered. Gift / lend an amount of money This option effectively gives their children at least some of the money for a deposit, whether it be a small amount or significant amount of the funds required. This can either be to meet the deposit requirement or reduce the loan amount to a level that is affordable. However you should seek guidance from an experienced Finance Broker or credit adviser before finalising any agreement. If the funds are a loan, then the lender will take the repayment of this debt into account in assessing the maximum bank loan that is affordable. If the funds are a “gift”, then lender is likely to require a Statutory Declaration, or similar, confirming that the funds are not repayable. So if ‘mum and dad’ ever want the money back, particularly in a shorter time frame, then it may be difficult to do so without the sale of an asset. A Family Guarantee This option is becoming more and more popular. In basic terms this option sees the parents provide a mortgage over the surplus equity in their own home (or an investment property) as a deposit, instead of the kids providing a cash deposit. The kids still need to demonstrate that they can afford and repay the lenders loan, but this option can potentially fund the purchase price plus fees and avoid Lenders Mortgage insurance. This is particularly useful if the kids have strong income but are yet to have the time to save a big enough deposit. In fact, depending on the lender, this form of guarantee can potentially be provided by any close family member (i.e. grand parent, sibling etc). However each lender is different on their requirements for this type of loan, and not all lenders will offer this type of facility, or limit the level of guarantee required. A Finance Broker should therefore be consulted to assess and explain the option s available and the impact should the parents require their guarantee to be discharged in the short term. There is also some risks to parents in providing a guarantee. For example if the kids don’t repay the loan they may be called upon to remedy any arrears. For this reason all lenders will recommend that independent legal advice is sought, and in fact some will make this a requirement of the loan. Support their kids at home why they buy an Investment Property This is an option that is also becoming more prevalent. Basically the kids buy a property that they would like to live in eventually, but initially live at home on preferential terms (i.e low board) and lease the property out to tenants. The rent therefore assists in meeting loan repayments. The kids effectively have tenants helping them get into the property market, as after taking into account rental income, their borrowing capacity can be improved. In fact with negative gearing benefits the financial benefits can b e quite significant. But again, up front professional advice should be sort from accountants, financial planners and finance brokers so that all aspects (i.e. potential capital gains impact) are considered. Summary To get into the property market can be difficult. But there are many ways that parents can help their kids get a foothold and make the journey a little easier, if they have the capacity to. Your local Finance Broker can provide assistance in working through the options on offer and help you establish what may suit your personal circumstances. So, if you are a potential first home buyer, how nice have you been to your parents?

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Is a tree or sea change on your horizon?

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Is a tree or sea change on your horizon? Fresh air, no bumper-to-bumper traffic and more affordable home prices. There’s plenty of appeal in regional living, including a chance to potentially reduce your home loan.

Is a tree or sea change on your horizon?

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Is a tree or sea change on your horizon? Fresh air, no bumper-to-bumper traffic and more affordable home prices. There’s plenty of appeal in regional living, including a chance to potentially reduce your home loan.

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Is a tree or sea change on your horizon? Fresh air, no bumper-to-bumper traffic and more affordable home prices. There’s plenty of appeal in regional living, including a chance to potentially reduce your home loan.

Why three-in-four Aussies turn to a broker for home loan help

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Why three-in-four Aussies turn to a broker for home loan help You might have seen a headline or two about a particular big bank being at war with brokers. Nothing could be further from the truth. Our mission is – and always will be – putting you first. That’s why three in every four borrowers now come to us for help.

Why three-in-four Aussies turn to a broker for home loan help

News
Why three-in-four Aussies turn to a broker for home loan help You might have seen a headline or two about a particular big bank being at war with brokers. Nothing could be further from the truth. Our mission is – and always will be – putting you first. That’s why three in every four borrowers now come to us for help.

Why three-in-four Aussies turn to a broker for home loan help

News
Why three-in-four Aussies turn to a broker for home loan help You might have seen a headline or two about a particular big bank being at war with brokers. Nothing could be further from the truth. Our mission is – and always will be – putting you first. That’s why three in every four borrowers now come to us for help.

Mortgage featured stories

The “Bank of Mum & Dad”

Home Finance, Mortgage Broking, Property, Tips
Share
There are many kids in Australia who have treated their parents as a ‘bank’ as they have grown up. Whether it was getting the newest game or latest technology before they had saved enough pocket money, or even as big as asking for assistance to buy a car in their late teens. But these days with the cost of housing many kids are seeking much larger withdrawals and assistance from the ‘Bank of Mum & Dad’ to help them get into property ownership. Lets face it. It is not easy to save the money for a deposit on a house, and then there are the added purchase costs such as Stamp Duty and Transfer fees that can quickly mount up. Not to mention Lenders Mortgage Insurance if you haven’t saved enough deposit (What is Lenders Mortgage Insurance?). So how can Mum & Dad help their kids get into property ownership? There are several avenues that can be considered. Gift / lend an amount of money This option effectively gives their children at least some of the money for a deposit, whether it be a small amount or significant amount of the funds required. This can either be to meet the deposit requirement or reduce the loan amount to a level that is affordable. However you should seek guidance from an experienced Finance Broker or credit adviser before finalising any agreement. If the funds are a loan, then the lender will take the repayment of this debt into account in assessing the maximum bank loan that is affordable. If the funds are a “gift”, then lender is likely to require a Statutory Declaration, or similar, confirming that the funds are not repayable. So if ‘mum and dad’ ever want the money back, particularly in a shorter time frame, then it may be difficult to do so without the sale of an asset. A Family Guarantee This option is becoming more and more popular. In basic terms this option sees the parents provide a mortgage over the surplus equity in their own home (or an investment property) as a deposit, instead of the kids providing a cash deposit. The kids still need to demonstrate that they can afford and repay the lenders loan, but this option can potentially fund the purchase price plus fees and avoid Lenders Mortgage insurance. This is particularly useful if the kids have strong income but are yet to have the time to save a big enough deposit. In fact, depending on the lender, this form of guarantee can potentially be provided by any close family member (i.e. grand parent, sibling etc). However each lender is different on their requirements for this type of loan, and not all lenders will offer this type of facility, or limit the level of guarantee required. A Finance Broker should therefore be consulted to assess and explain the option s available and the impact should the parents require their guarantee to be discharged in the short term. There is also some risks to parents in providing a guarantee. For example if the kids don’t repay the loan they may be called upon to remedy any arrears. For this reason all lenders will recommend that independent legal advice is sought, and in fact some will make this a requirement of the loan. Support their kids at home why they buy an Investment Property This is an option that is also becoming more prevalent. Basically the kids buy a property that they would like to live in eventually, but initially live at home on preferential terms (i.e low board) and lease the property out to tenants. The rent therefore assists in meeting loan repayments. The kids effectively have tenants helping them get into the property market, as after taking into account rental income, their borrowing capacity can be improved. In fact with negative gearing benefits the financial benefits can b e quite significant. But again, up front professional advice should be sort from accountants, financial planners and finance brokers so that all aspects (i.e. potential capital gains impact) are considered. Summary To get into the property market can be difficult. But there are many ways that parents can help their kids get a foothold and make the journey a little easier, if they have the capacity to. Your local Finance Broker can provide assistance in working through the options on offer and help you establish what may suit your personal circumstances. So, if you are a potential first home buyer, how nice have you been to your parents?

More Stories

Is a tree or sea change on your horizon?

News
Is a tree or sea change on your horizon? Fresh air, no bumper-to-bumper traffic and more affordable home prices. There’s plenty of appeal in regional living, including a chance to potentially reduce your home loan.

Is a tree or sea change on your horizon?

News
Is a tree or sea change on your horizon? Fresh air, no bumper-to-bumper traffic and more affordable home prices. There’s plenty of appeal in regional living, including a chance to potentially reduce your home loan.

Is a tree or sea change on your horizon?

News
Is a tree or sea change on your horizon? Fresh air, no bumper-to-bumper traffic and more affordable home prices. There’s plenty of appeal in regional living, including a chance to potentially reduce your home loan.

Why three-in-four Aussies turn to a broker for home loan help

News
Why three-in-four Aussies turn to a broker for home loan help You might have seen a headline or two about a particular big bank being at war with brokers. Nothing could be further from the truth. Our mission is – and always will be – putting you first. That’s why three in every four borrowers now come to us for help.

Why three-in-four Aussies turn to a broker for home loan help

News
Why three-in-four Aussies turn to a broker for home loan help You might have seen a headline or two about a particular big bank being at war with brokers. Nothing could be further from the truth. Our mission is – and always will be – putting you first. That’s why three in every four borrowers now come to us for help.

Why three-in-four Aussies turn to a broker for home loan help

News
Why three-in-four Aussies turn to a broker for home loan help You might have seen a headline or two about a particular big bank being at war with brokers. Nothing could be further from the truth. Our mission is – and always will be – putting you first. That’s why three in every four borrowers now come to us for help.

Mortgage featured stories

The “Bank of Mum & Dad”

Home Finance, Mortgage Broking, Property, Tips
Share
There are many kids in Australia who have treated their parents as a ‘bank’ as they have grown up. Whether it was getting the newest game or latest technology before they had saved enough pocket money, or even as big as asking for assistance to buy a car in their late teens. But these days with the cost of housing many kids are seeking much larger withdrawals and assistance from the ‘Bank of Mum & Dad’ to help them get into property ownership. Lets face it. It is not easy to save the money for a deposit on a house, and then there are the added purchase costs such as Stamp Duty and Transfer fees that can quickly mount up. Not to mention Lenders Mortgage Insurance if you haven’t saved enough deposit (What is Lenders Mortgage Insurance?). So how can Mum & Dad help their kids get into property ownership? There are several avenues that can be considered. Gift / lend an amount of money This option effectively gives their children at least some of the money for a deposit, whether it be a small amount or significant amount of the funds required. This can either be to meet the deposit requirement or reduce the loan amount to a level that is affordable. However you should seek guidance from an experienced Finance Broker or credit adviser before finalising any agreement. If the funds are a loan, then the lender will take the repayment of this debt into account in assessing the maximum bank loan that is affordable. If the funds are a “gift”, then lender is likely to require a Statutory Declaration, or similar, confirming that the funds are not repayable. So if ‘mum and dad’ ever want the money back, particularly in a shorter time frame, then it may be difficult to do so without the sale of an asset. A Family Guarantee This option is becoming more and more popular. In basic terms this option sees the parents provide a mortgage over the surplus equity in their own home (or an investment property) as a deposit, instead of the kids providing a cash deposit. The kids still need to demonstrate that they can afford and repay the lenders loan, but this option can potentially fund the purchase price plus fees and avoid Lenders Mortgage insurance. This is particularly useful if the kids have strong income but are yet to have the time to save a big enough deposit. In fact, depending on the lender, this form of guarantee can potentially be provided by any close family member (i.e. grand parent, sibling etc). However each lender is different on their requirements for this type of loan, and not all lenders will offer this type of facility, or limit the level of guarantee required. A Finance Broker should therefore be consulted to assess and explain the option s available and the impact should the parents require their guarantee to be discharged in the short term. There is also some risks to parents in providing a guarantee. For example if the kids don’t repay the loan they may be called upon to remedy any arrears. For this reason all lenders will recommend that independent legal advice is sought, and in fact some will make this a requirement of the loan. Support their kids at home why they buy an Investment Property This is an option that is also becoming more prevalent. Basically the kids buy a property that they would like to live in eventually, but initially live at home on preferential terms (i.e low board) and lease the property out to tenants. The rent therefore assists in meeting loan repayments. The kids effectively have tenants helping them get into the property market, as after taking into account rental income, their borrowing capacity can be improved. In fact with negative gearing benefits the financial benefits can b e quite significant. But again, up front professional advice should be sort from accountants, financial planners and finance brokers so that all aspects (i.e. potential capital gains impact) are considered. Summary To get into the property market can be difficult. But there are many ways that parents can help their kids get a foothold and make the journey a little easier, if they have the capacity to. Your local Finance Broker can provide assistance in working through the options on offer and help you establish what may suit your personal circumstances. So, if you are a potential first home buyer, how nice have you been to your parents?

More Stories

Is a tree or sea change on your horizon?

News
Is a tree or sea change on your horizon? Fresh air, no bumper-to-bumper traffic and more affordable home prices. There’s plenty of appeal in regional living, including a chance to potentially reduce your home loan.

Is a tree or sea change on your horizon?

News
Is a tree or sea change on your horizon? Fresh air, no bumper-to-bumper traffic and more affordable home prices. There’s plenty of appeal in regional living, including a chance to potentially reduce your home loan.

Is a tree or sea change on your horizon?

News
Is a tree or sea change on your horizon? Fresh air, no bumper-to-bumper traffic and more affordable home prices. There’s plenty of appeal in regional living, including a chance to potentially reduce your home loan.

Why three-in-four Aussies turn to a broker for home loan help

News
Why three-in-four Aussies turn to a broker for home loan help You might have seen a headline or two about a particular big bank being at war with brokers. Nothing could be further from the truth. Our mission is – and always will be – putting you first. That’s why three in every four borrowers now come to us for help.

Why three-in-four Aussies turn to a broker for home loan help

News
Why three-in-four Aussies turn to a broker for home loan help You might have seen a headline or two about a particular big bank being at war with brokers. Nothing could be further from the truth. Our mission is – and always will be – putting you first. That’s why three in every four borrowers now come to us for help.

Why three-in-four Aussies turn to a broker for home loan help

News
Why three-in-four Aussies turn to a broker for home loan help You might have seen a headline or two about a particular big bank being at war with brokers. Nothing could be further from the truth. Our mission is – and always will be – putting you first. That’s why three in every four borrowers now come to us for help.

First home buyers turn to Bank of Nan and Pop

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First home buyers turn to Bank of Nan and Pop Nan and Pop have always been good for birthday money, but one-in-10 grandparents are taking their generosity to the next level: helping their grandkids buy a first home.

First home buyers turn to Bank of Nan and Pop

News
First home buyers turn to Bank of Nan and Pop Nan and Pop have always been good for birthday money, but one-in-10 grandparents are taking their generosity to the next level: helping their grandkids buy a first home.

First home buyers turn to Bank of Nan and Pop

News
First home buyers turn to Bank of Nan and Pop Nan and Pop have always been good for birthday money, but one-in-10 grandparents are taking their generosity to the next level: helping their grandkids buy a first home.

What you should know before buying ‘subject to finance’

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What you should know before buying ‘subject to finance’ Not sure if you’ll get the thumbs up for a home loan? But you really, really like that house that just popped up? Making an offer ‘subject to finance’ could be the right move. Here’s how it works.

What you should know before buying ‘subject to finance’

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What you should know before buying ‘subject to finance’ Not sure if you’ll get the thumbs up for a home loan? But you really, really like that house that just popped up? Making an offer ‘subject to finance’ could be the right move. Here’s how it works.

What you should know before buying ‘subject to finance’

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Not feeling the budget love? 4 ways you could still get ahead

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Not feeling the budget love? 4 ways you could still get ahead If the latest federal government budget is leaving you hungry for perks and savings, you’re not alone. We’ve had a brainstorm and here are four ways you could start working towards your property goals now.

Not feeling the budget love? 4 ways you could still get ahead

News
Not feeling the budget love? 4 ways you could still get ahead If the latest federal government budget is leaving you hungry for perks and savings, you’re not alone. We’ve had a brainstorm and here are four ways you could start working towards your property goals now.

Not feeling the budget love? 4 ways you could still get ahead

News
Not feeling the budget love? 4 ways you could still get ahead If the latest federal government budget is leaving you hungry for perks and savings, you’re not alone. We’ve had a brainstorm and here are four ways you could start working towards your property goals now.

Low deposit scheme helps over 150,000 families buy sooner

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Low deposit scheme helps over 150,000 families buy sooner Whether you’re rat running your local streets, or have a knack for always picking the fast-moving supermarket queue – everyone loves a good time-saving hack. Well, today we’ll let you in on a scheme that could get you into your first home years – yep years – sooner!

Low deposit scheme helps over 150,000 families buy sooner

News
Low deposit scheme helps over 150,000 families buy sooner Whether you’re rat running your local streets, or have a knack for always picking the fast-moving supermarket queue – everyone loves a good time-saving hack. Well, today we’ll let you in on a scheme that could get you into your first home years – yep years – sooner!

Low deposit scheme helps over 150,000 families buy sooner

News
Low deposit scheme helps over 150,000 families buy sooner Whether you’re rat running your local streets, or have a knack for always picking the fast-moving supermarket queue – everyone loves a good time-saving hack. Well, today we’ll let you in on a scheme that could get you into your first home years – yep years – sooner!

Here’s why your borrowing power might soon get a lift

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Here’s why your borrowing power might soon get a lift Who doesn’t love a tax cut? Most of us are now only weeks away from saving on our tax bills, with Stage 3 tax cuts to kick in from 1 July. But another key advantage is that the tax cuts could give your borrowing power a nice boost.

Here’s why your borrowing power might soon get a lift

News
Here’s why your borrowing power might soon get a lift Who doesn’t love a tax cut? Most of us are now only weeks away from saving on our tax bills, with Stage 3 tax cuts to kick in from 1 July. But another key advantage is that the tax cuts could give your borrowing power a nice boost.

Here’s why your borrowing power might soon get a lift

News
Here’s why your borrowing power might soon get a lift Who doesn’t love a tax cut? Most of us are now only weeks away from saving on our tax bills, with Stage 3 tax cuts to kick in from 1 July. But another key advantage is that the tax cuts could give your borrowing power a nice boost.

What you should know before buying ‘subject to finance’

News
What you should know before buying ‘subject to finance’ Not sure if you’ll get the thumbs up for a home loan? But you really, really like that house that just popped up? Making an offer ‘subject to finance’ could be the right move. Here’s how it works.

What you should know before buying ‘subject to finance’

News
What you should know before buying ‘subject to finance’ Not sure if you’ll get the thumbs up for a home loan? But you really, really like that house that just popped up? Making an offer ‘subject to finance’ could be the right move. Here’s how it works.

What you should know before buying ‘subject to finance’

News
What you should know before buying ‘subject to finance’ Not sure if you’ll get the thumbs up for a home loan? But you really, really like that house that just popped up? Making an offer ‘subject to finance’ could be the right move. Here’s how it works.

Not feeling the budget love? 4 ways you could still get ahead

News
Not feeling the budget love? 4 ways you could still get ahead If the latest federal government budget is leaving you hungry for perks and savings, you’re not alone. We’ve had a brainstorm and here are four ways you could start working towards your property goals now.

Not feeling the budget love? 4 ways you could still get ahead

News
Not feeling the budget love? 4 ways you could still get ahead If the latest federal government budget is leaving you hungry for perks and savings, you’re not alone. We’ve had a brainstorm and here are four ways you could start working towards your property goals now.

Not feeling the budget love? 4 ways you could still get ahead

News
Not feeling the budget love? 4 ways you could still get ahead If the latest federal government budget is leaving you hungry for perks and savings, you’re not alone. We’ve had a brainstorm and here are four ways you could start working towards your property goals now.

Low deposit scheme helps over 150,000 families buy sooner

News
Low deposit scheme helps over 150,000 families buy sooner Whether you’re rat running your local streets, or have a knack for always picking the fast-moving supermarket queue – everyone loves a good time-saving hack. Well, today we’ll let you in on a scheme that could get you into your first home years – yep years – sooner!

Low deposit scheme helps over 150,000 families buy sooner

News
Low deposit scheme helps over 150,000 families buy sooner Whether you’re rat running your local streets, or have a knack for always picking the fast-moving supermarket queue – everyone loves a good time-saving hack. Well, today we’ll let you in on a scheme that could get you into your first home years – yep years – sooner!

Low deposit scheme helps over 150,000 families buy sooner

News
Low deposit scheme helps over 150,000 families buy sooner Whether you’re rat running your local streets, or have a knack for always picking the fast-moving supermarket queue – everyone loves a good time-saving hack. Well, today we’ll let you in on a scheme that could get you into your first home years – yep years – sooner!

Here’s why your borrowing power might soon get a lift

News
Here’s why your borrowing power might soon get a lift Who doesn’t love a tax cut? Most of us are now only weeks away from saving on our tax bills, with Stage 3 tax cuts to kick in from 1 July. But another key advantage is that the tax cuts could give your borrowing power a nice boost.

Here’s why your borrowing power might soon get a lift

News
Here’s why your borrowing power might soon get a lift Who doesn’t love a tax cut? Most of us are now only weeks away from saving on our tax bills, with Stage 3 tax cuts to kick in from 1 July. But another key advantage is that the tax cuts could give your borrowing power a nice boost.

Here’s why your borrowing power might soon get a lift

News
Here’s why your borrowing power might soon get a lift Who doesn’t love a tax cut? Most of us are now only weeks away from saving on our tax bills, with Stage 3 tax cuts to kick in from 1 July. But another key advantage is that the tax cuts could give your borrowing power a nice boost.

How to know if you’re paying a fair price

News
How to know if you’re paying a fair price We all love the idea of nabbing a bargain property, but for most home buyers the real issue is whether they’re overvaluing a place – and paying too much in the process.

How to know if you’re paying a fair price

News
How to know if you’re paying a fair price We all love the idea of nabbing a bargain property, but for most home buyers the real issue is whether they’re overvaluing a place – and paying too much in the process.

How to know if you’re paying a fair price

News
How to know if you’re paying a fair price We all love the idea of nabbing a bargain property, but for most home buyers the real issue is whether they’re overvaluing a place – and paying too much in the process.

Can you remember your home loan interest rate?

News
Can you remember your home loan interest rate? Where you put your car keys, who won the footy premiership three years back, the new prime minister of New Zealand’s name – all very much socially acceptable things to forget. Your home loan rate shouldn’t be on that list.

Can you remember your home loan interest rate?

News
Can you remember your home loan interest rate? Where you put your car keys, who won the footy premiership three years back, the new prime minister of New Zealand’s name – all very much socially acceptable things to forget. Your home loan rate shouldn’t be on that list.

Can you remember your home loan interest rate?

News
Can you remember your home loan interest rate? Where you put your car keys, who won the footy premiership three years back, the new prime minister of New Zealand’s name – all very much socially acceptable things to forget. Your home loan rate shouldn’t be on that list.