Buying property is a dream for many Australians – and with favourable conditions in most markets and record low interest rates, there are many opportunities for first home buyers.
However, saving for a deposit can be a struggle. For those lucky few with parents who can help, funds from ‘the bank of mum and dad’ can help first home buyers break into the market.
Just as it sounds, a gifted deposit is a lump sum of money given to a borrower to help them secure a mortgage.
While it may seem like a simple way to build a deposit, some lenders will penalise borrowers or only partially accept gifted funds.
This is because they don’t consider the money as coming from genuine savings, which gives an indication of sound financial management skills.
However, flexible lenders like Liberty, take a more free-thinking approach when assessing borrowers and will accept gifted deposits.
Another way that parents can help their children to buy a home is by lending money towards the deposit.
As you will be expected to repay the loan, your lender may take this extra expense into account when assessing your ability to repay the loan.
So, it’s worth getting your agreed repayment schedule in writing.
Have you considered buying a property with your parents? While less common, shared ownership can offer many advantages.
Depending on the loan structure, you may only have to pay your share of the costs.
Should the property value increase, you can all benefit from capital gains when you sell.
However, it’s important to consider the tax implications before you buy.
To find out more, contact a Liberty Adviser today.