Parents as guarantors: end your child’s first home mirage

Parents as guarantors: end your child’s first home mirage

They grow up so fast. One minute they’re nagging you for a dollhouse, the next, it’s for help buying a two bedroom unit in an up-and-coming suburb. If you always find it hard to say ‘no’ to your kids, here’s how to say ‘yes’ the right way.

You’ve probably heard your children complain about how hard it is to crack into today’s property market.

And smashed-avocado shenanigans aside, they do have a point. It is tougher nowadays.

With the property market constantly on the up-and-up, reaching that 10% to 20% deposit can feel like a mirage for your child.

The good news is that you can help them obtain that slightly out-of-reach home loan by using the equity in your property.

How it works

Banks find it risky to lend to borrowers who have an unstable job or low deposit. But they do allow seemingly more-reliable immediate family members to guarantee a home loan.

Guarantor loans have huge benefits for your children, including:

No deposit required: If guaranteed against a parent’s property equity, your child may be entitled to borrow 100% to 110% of the purchase price of a property. That means no deposit is required. Instead, your child can focus their savings on white goods and repayments.

Discounted interest rates: Guarantor loans can come with reduced interest rates and we can help you secure a great deal.

No Lenders Mortgage Insurance (LMI): Your child will likely not need to get LMI because the equity is usually enough of a guarantee to protect the lender against losses.

Things parents should keep in mind

Sounds great, right? But it’s not entirely without its risks. Here’s what you as a parent need to keep in mind:

Safeguard your credit report: Be sure that you can honour the repayments in case things go awry and your child is unable to pay. You should be positive that they will uphold their end of the bargain, but also prepare for the unexpected.

Financial risk versus emotional benefits: Going guarantor makes you financially responsible if your child defaults on payments. The emotional benefits, however, can outweigh the risk.

Impacts on your borrowing capacity: Future credit providers will take into account the guaranteed loan. They will assess your borrowing capacity based on it, and whether or not you are an active participator in the repayments of your child’s mortgage.

How we can help

We understand that when it comes to your children, it can be near-impossible to take your emotions out of decision making. That’s where we come in.

We can help you calculate whether or not you have the equity to make this work, and assess your child’s financial capabilities to see if they’re in a position to be making repayments.

We’ll also help you understand your legal liability as a guarantor before helping you make the big decision. So give us a call today.



Four simple ways to increase your property’s resale value

Four simple ways to increase your property’s resale value

Everyone dreams of investing in a home or business that will fetch them more money than they originally bought it for. Here’s how to roll-up your sleeves and get started.

Making the appearance of your property desirable is critical because yours will be among a long list of properties that a potential buyer will see.

So how do you make your property stand out from the pack?

Well, by implementing a few of the below affordable steps you may not only raise the appraisal value of your property – but maybe a few eyebrows too.

1. Kitchen and bathroom upgrade

The kitchen and the bathroom attract the most scrutiny from potential home buyers and can make or break a deal.

Therefore, you should consider allocating the larger chunk of your remodelling budget to these spaces.

If your budget allows for it, consider installing new modern sinks, updating the countertops and replacing old cabinets.

2. Improve energy efficiency

Buyers will generally be willing to dig a little deeper into their pockets for a home that will help them save on energy costs in the long run.

So hire a Level 2 electrician to inspect the property and try to follow their recommendations to the letter.

You can install appliances that have positive energy conservation ratings and also replace old windows with ones that have a durable sealing. New modern doors and increased insulation can also boost energy efficiency in your home.

3. Give it a fresh coat of paint

Painting can make a property look and feel new. Who wouldn’t want to buy a home or business that’s ready for them to move in immediately?

However, go for neutral creams and whites that will suit most people’s preferences and avoid bold colours.

Remember that lighter shades like beige and white give the impression of spacious rooms.

4. Enhance curb appeal

The appeal of your property, when viewed from a distance, is important.

If it looks abandoned and gloomy, then it needs work to make sure it ready to greet its new owner.

You can make cosmetic improvements like trimming overgrown bushes, mowing the lawns, planting grass on bare areas and growing flowers.

Final tips

Property improvement should not cost you too much if you focus on the critical areas that appeal the most to buyers. It also helps to think of the above ideas as adding to your investment – not an expense.

If you’re unsure where to start, or would like some extra tips, don’t hesitate to get in touch.

We understand precisely what residential and commercial buyers look for in a home and investment property respectively, and would be more than happy to help out.