Saving to buy a property is not easy, and these days it’s harder than ever, due to a lack of affordable options in many capital cities.
If you have a family member who is currently saving to buy, you’ll know how stressful and drawn-out that period can be. There are however ways that can assist them to reach their target quicker. Carol King from Loan Market explains there are some great options where families can assist in the process.
If someone in the family is in the position to do so, a monetary gift can be a big help. Instead of buying presents for their birthday or other celebrations, they could suggest contributing to a ‘house deposit fund’. If they have been slogging away to build up their deposit, every little bit helps, and any contribution can keep them on track and motivated. While this may seem like an impersonal gift, it’s likely they need money far more than they do more ‘stuff’.
Should there be a family trust, discuss the options available when it comes to buying the new home. Depending on the ownership structure of the trust, decide how much money will be allocated and any terms associated with it. A financial advisor can help the family with this process.
Another way to help out is by going guarantor on a family member’s home loan. This is a big commitment, as they’ll be the one responsible for the loan repayment should they not be able to pay it back. It’s therefore important to seek independent legal advice and openly discuss what is involved and the potential outcomes. Both parties want to be clear on what is required and the repercussions should they fail to have the money for the loan. If they feel comfortable proceeding, acting as guarantor will be a big help in securing their loan, giving them a much-needed leg-up.
If the potential home buyer is also getting married sometime soon, you can talk with them about whether they’d prefer setting up a savings fund rather than a gift registry. Getting all of the guests onboard with this wish will make a big impact.