Most parents would love to be able to help their children get their own home or rental property. Where they could start a new life and probably a family. It’s a great legacy and one of the most helpful acts. That every parent can do when it comes to the wellbeing of their children.
The steps that can be taken in that direction are different. But they are all undoubtedly useful since they take at least some load off the child. After all, it’s always great to receive a gentle push when it comes to solving one of the key issues in every person’s life. So, what is it that parents can do to help their children?
Lending or giving money
A great deal of money that first-time buyers have borrowed actually comes from their parents. Mums and dads are among the top mortgage lenders all over the world. Some parents offer their money with no interest rate to their children. While others are only too happy to be able to help that they never expect their children to pay them back.
When it comes to loans, there are also parents who structure a deal which includes an interest rate. But it’s generally lower than the one offered by a bank. Also, children are happy to accept such offers. Since they feel more secure that they won’t lose their property in case they have a problem paying back the loan. Because they don’t expect their parents to file a suit against their own children.
It has to be legal
Be careful with your help, though, because you don’t want to get yourself or your child into trouble by being too generous. For example, they can’t be exempt from stamp duty as first-time buyers if your name is on the mortgage application, too.
Also, make sure you respect the inheritance tax rules while helping your child. Think about gifting them a regular amount each month, instead of splashing out a lump sum. This “gift out of normal expenditure” is inheritance-tax free, provided it is regular and doesn’t affect your normal standard of living.
Moving out so that they can move in
One of the ways you can help your child get onto the property ladder is to actually move out of your home and let your child move in. If you’re no longer living with your children, chances are you don’t need that big a home anymore. Also, why would you pay the bills and renovation works on your home if it is no longer the right one for you?
You may opt for a smaller house or one of the modern retirement living homes such as Mark Moran Vaucluse. Where you can also get all the assistance you may need. One of the options is to make a deal with your child where they would pay for your stay instead of paying loan instalments they would otherwise have to face.
Get them involved
If you’ve encouraged your child to start saving for their first home before they actually started browsing the market. You’ve done them a great favor. Not only will they feel they are responsible individuals (and they definitely are). But it’ll also help you since you wouldn’t have to make such a great financial sacrifice alone.
Whatever support you provide to your child, rest assured it’ll be valuable. The question is just what the best type of help you can give at the particular moment is. There is no generally accepted solution that everyone finds great. Because such a solution depends on many factors and each situation is different. However, you’ll be rewarded with the knowledge that you’ve done one more thing towards making your child independent, which should be everyone’s goal.
By Amelia Atkins