The Property Trio (formerly The Property Planner, Buyer and Professor)

#95: Security guarantees, co-borrowing, gifts and more - Helping your kids buy their first property


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https://propertyplanning.com.au/propertyplannerbuyerprofessor/ In this week's ep#76, Dave, Cate and Pete take our listeners through: Market insights 1. March index results show the largest growth since 1988 CoreLogic property results are finally starting to show what we've been seeing on the ground since late last year. Every capital city is increasing full steam ahead. We think the market is only going to heat up further and there's more to go in this property run. What's more, we know that data lag creates delayed reporting. Our trio are certain that the record growth is yet to come to light. 2. First time buyers dominating the market Despite the fact that prices are high, first home buyers have never had it easier to get their first property purchase under their belt. Interest rates are the lowest they've ever been, the level of government stimulus and support is at an all-time high and savings are at record levels as well after months of buckling down (and locking down) on savings, particularly in the Melbourne market. As we recall, Melbourne suffered the longest periods of lockdown in our nation and the strength of the market bounce-back is palpable. 3. The bank of mum and dad Another player in the first home buyer corner is the bank of mum and dad providing their assistance. Parental contributions are averaging more than $89,000, which is an increase of nearly 20 per cent in the past 12 months. $89,000 is enough for a 20 per cent deposit in most of the nation's postcodes outside Melbourne and Sydney. 4. APRA won't intervene in the short-term At the Australian Financial Review Banking Summit held last week, APRA have said that their job is not to regulate the property market, it is to make sure there's no systemic risk in bank lending. As the media and political pressure increases with property values rising to new highs, APRA may get a tap on the shoulder sooner than anticipated to intervene and help take the heat out of the market. How to help your kids get on the property ladder 1. Monetary gifts (it's better than Christmas!) One of the primary ways a parent can assist their child is providing a lump sum of money to go towards the deposit. The trio explain how this method can be particularly helpful for many first-time buyers who have a strong borrowing capacity. 2. The difference between gifts and genuine savings Despite your generous gift, a lender may still require evidence of genuine savings before they provide the tick of approval. The trio discuss the optimum timing to give your gift, and some of the perils and pitfalls associated with this approach. 3. Security guarantees - the most popular method of assistance The Property Planner and Buyer take you through how a security guarantee works, the benefits and why it is the most common way parents help their kids in property. 4. Going in to a security guarantee with your eyes open If you've got equity available in your property, it may sound like a fantastic idea to offer your home or investment as a security. But as with any major decision, there are risks involved, not to mention a mountain of paperwork. The trio discuss the ins and outs of providing a security guarantee and costs, (and steps) involved. 5. Co-borrowing with your kids The Property Buyer and Professor share their first-hand experience of purchasing a property with their children. They cover off on ownership considerations, caveats and the agreements they've made with their kids. 6. The...
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The Property Trio (formerly The Property Planner, Buyer and Professor)By Cate Bakos, David Johnston and Mike Mortlock

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