How Parents Can Help Their Kids Without Losing Their House

About one in five first home buyers last year were at least partly financed by their parents. According to the Sydney Morning Herald, that number had increased by four per cent in just a couple of years1.
In the past, parents only had three ways to help their kids get on to the ‘property ladder’:

● Act as guarantor on their child’s loan
● Gift some money for deposit, or
● Buy the house with the child as co-purchasers.

Of course there are potential problems with each option.

As guarantors, the parents may put their own home or their retirement savings at risk. If the parents go in as co-purchasers, their kids lose any chance of qualifying for a First Home Owners Grant or stamp duty concessions. And if the young purchaser receives the deposit as a gift, they have no record of saving to show a prospective lender.
Fast Debt Help is excited to offer a better solution, thanks to La Trobe Financial and its P2C® product which sets up a loan to the First Home Buyer without endangering the parents’ own assets.

Instead the generous parents determine the details.

● The dollar amount (up to 105% of purchase price)
● The term of the loan (up to 25 years)
● The interest rate (min CPI + 0.5% = 2% as at Dec 2017)
● Parents can waive / forgive the debt or enforce the loan at any time.

Fast Debt Help works with the parties to draw up legally-binding paperwork in one transaction to the agreed terms. The borrower finds a property and applies for the First Home Owners Grant. La Trobe Financial lends the funds and handles repayments from the new home-owner to their parents.

Our next blog, The Smart Way to Borrow From the ‘Mum and Dad Bank’ shows the many benefits for lenders and borrowers under a P2C® loan.

1 http://www.smh.com.au/money/borrowing/more-parents-helping-children-onto-property-ladder-20160921

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