16 July 2016 How you could help your kids buy their first home When it comes to helping your children into their first home, parental assistance can come in many forms. Here are four ways you could help your children on to the property ladder sooner. 1. Act as a guarantor With RAMS Fast Track, not only can your children borrow the full purchase price (or valuation if lower) but they could also save thousands in Lender’s Mortgage Insurance (LMI) costs. A Guarantor – a parent or sibling of the applicant - needs to provide a limited guarantee supported by a registered first mortgage** over their property, for an agreed amount calculated as a percentage of the loan amount taking into account the property purchase price (or valuation if lower). This could potentially allow your children to borrow the full purchase price plus costs without paying Lender’s Mortgage Insurance. It’s important that you obtain independent legal and financial advice on the implications to you in the unlikely event that your children can’t make their repayments, before proceeding. 2. Give a cash gift This is one of the most common and popular options. Parents are free of any ongoing contractual arrangements or obligations that come with becoming a guarantor. Also, they won't have to worry about buying birthday or Christmas presents for the next, say, 20 years! 3. Buy the property Parents will finally have their freedom and pick up a nice investment property at the same time. They have the option to charge rent and earn another income, or allow their children to live there rent-free. However, this does defeat the objective of helping their children own their first home. 4. Buy together Again, this situation is an investment opportunity with both parent and child sharing the ongoing cost of the mortgage which can work for both of you. Think of it as property investment half-way house for your children. With good, sound advice and a helping hand, your children could realise the great Australian dream of home ownership sooner than you think. ** The mortgage provided by the guarantor must either be a registered first mortgage, or a registered second mortgage behind an Australian Financial Institution provided the first mortgage does not secure a reverse mortgage. Other conditions apply. The borrower must also provide a mortgage over the property they are purchasing. Speak to Ken Wilson at RAMS Sydney South East about your home loan needs.