The property market is a tough nut to crack for today’s first homebuyers, but with a little family backing home ownership may be more affordable than many people realise.
Soaring rents and the rising cost of living have made it tough for would-be buyers to save a deposit.
While plenty of young people can afford to service a mortgage, they sometimes struggle to stump up the deposit that most banks require. However with your support you might be able to help your kids realise homeownership sooner – all without dipping into your own savings or liquidating your assets.
By going guarantor you can help your kids make their start in the property market by unlocking the equity in your own home and using it as collateral. The process is surprisingly easy as well – your broker can quickly make the arrangements.
Being a guarantor does come with certain responsibilities however, so it’s important to go in with your eyes open.
If you choose to go guarantor for your children the lender will hold you responsible for repayments should they go unpaid. It is therefore essential that you look closely at their ability to meet their financial commitments and be confident that they fully understand where their responsibilities lie.
In addition, it is worthwhile noting that you may only have to act as guarantor for the first few years. As your children pay down their loan, or the value of their property increases, you’ll be able to withdraw your support – leaving them standing on their own two feet.
A good start in life can make all the difference further down the line and the earlier your children break into the property market the sooner they can look forward to owning their own home. With the right approach and understanding you can help their homeownership dreams become a reality.