Helping your kids get on the property ladder

Nurturing Future Homeowners: A Brief Guide for Parents in Australia

As parents, we share the common goal of providing our children with a strong start in life. However, the challenges of soaring property prices and fluctuating mortgage rates can make stepping onto the property ladder seem daunting. In this article, we will explore practical methods parents can use to support their children in achieving home ownership.

Property Ladder Challenges: High Prices and Mortgage Rates

  1. Extended Stays at Home:
    In the current landscape, young adult children often find it necessary to extend their stay in the family home. If this period serves as a financial stepping stone toward saving for a deposit, it can significantly accelerate their journey towards homeownership. Establishing clear ground rules and setting specific goals is crucial during this time, transforming the stay into a purposeful step towards independence rather than a freeloading situation.
  2. Home Super Saver and First Home Buyer Concessions:
    Inform your children about government initiatives like the Home Super Saver Scheme and First Home Buyer Concessions to ease the burden of entering the property market. The Home Super Saver Scheme allows first home buyers to accumulate funds for purchase or construction of their first home through tax-effective voluntary super contributions. While there are tax considerations to investigate, for many first home buyers this can be a tax-effective way to boost their deposit accumulation.
  3. Co-Ownership:
    If they can’t quite make it on their own, one strategy is to consider collaborating with your children on co-ownership, sharing both financial responsibility and rewards. It can also be a strategy for your children to get started together.
  4. Personal Lending:
    Explore personal lending options for some or all the required funds when traditional mortgages are challenging to secure. Typically, this is a short-term tactic, to get going until a refinance is possible.
  5. Financial Assistance Best Practices:
    Clearly define whether financial assistance is a gift or a loan, treating all siblings fairly, to avoid the all-too-common pitfalls of family disagreements over money. A documented loan agreement can help minimise misunderstandings, as well as protect your child in the event of a relationship breakdown. Consider other potential calamities – such as accident or illness – and formulate an appropriate exit strategy.
  6. Provision via a Will:
    Consider carefully how you might one day pass on your assets including property, and ensure your will reflects this. Testamentary Trust wills are particularly effective for tax-efficient asset transfer, ongoing financial support, as well as guarding against assets moving outside the family in the event of relationship breakdown.

Your Partner in great advice:
As your dedicated financial advice team, we are committed to helping you navigate the complexities of supporting your children’s journey into home ownership. Whether exploring government schemes, assessing borrowing capacity, documenting agreements, or implementing your estate planning, we are here to guide you.

A well-thought-out approach not only helps your children but also safeguards your interests. For questions or to discuss specific strategies, please contact AGS Financial Group today.

Published : 29 Jan 2024

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