I’ve seen firsthand how family support can make a significant difference for first home buyers. Nan and Pop have always been great for birthday money, but today, one in ten grandparents are taking their generosity to the next level: helping their grandkids buy their first home.
Most of us have special memories of pocketing a few treats from Granny and Gramps. Yet, those small gestures of affection we knew as kids are transforming into something far more valuable than a few sneaky lollies before dinner or a surprise Lego set.
Research by Compare the Market shows almost three-quarters of Aussie grandparents are giving their families a financial helping hand. Around 13% are lending money, 9% are chipping in with household bills, and one in ten are helping their grandkids buy a first home. It goes to show that we’re never too old for grandparents’ treats.
But if your Gramps and Granny are keen to help you get started in the property market, it’s important to have some open conversations first.
How Grandparents Can Help
It’s not unusual for first home buyers to need support from family, especially in today’s market. This support can come in a variety of ways:
- Acting as a Guarantor: One option is for a close relative to act as a guarantor for a first home buyer’s loan. It’s a big ask for grandparents, though. If the borrower can’t keep up with loan repayments, a lender can ask the guarantor to pay off the debt – something that could leave Nan and Pop financially strained.
- Gifting Money: If they can afford it, another way for grandparents to help their grandkids buy a home is by gifting money.
What to Be Aware Of
A cash gift doesn’t have to be huge to make a difference. It can help grow a deposit or contribute towards upfront buying costs such as lender’s mortgage insurance. However, there are traps to be aware of:
- Bank Reactions: A lump sum of cash landing in your bank account might prompt a ‘please explain’ from your lender. They may want to ensure it’s not a loan that grandma and grandpa expect to be repaid.
- Documentation: It’s a good idea for grandparents to write a letter specifying that they are unconditionally gifting the money with no strings attached.
- Family Dynamics: Nan and Pop should be completely sound of mind when gifting any money. The last thing you’d want to do is leave them short in funding their retirement or start a rift (or legal battle) with other family members who care for them as much as you do.
Talk to Me to Find Out How Family Can Help
Buying your first home is a special milestone, and it’s extra special when family members rally around to lend a hand. However, as we’ve outlined, it’s not without its potential pitfalls.
Call me today to explore the different ways your family might be able to help you buy a place of your own. Let’s make this journey as smooth and rewarding as possible for you and your loved ones.
0447654321
