Do you have adult children who would love to enter the property market, but find it unreachable as they have not managed to save the deposit, plus stamp duty required?
Many young adults are on good incomes, and would be able to manage mortgage repayments as interest rates are very low, however property prices are going up faster than they can accumulate money!
As a parent or close relative, you are able to “tap in” to equity you have in a property to assist with a deposit on a home. You must guarantee the loan, however your obligation is limited to the amount over 80 per cent of the value of the property. The guarantee is only to do with the property not the repayments. You would not be relied upon for the serviceability of the loan.
The great advantage of this type of structure is your children will not have to pay for mortgage insurance as the loan would be seen by the banks as the regular 80 per cent of value of property.
This type of loan only works for relatives be it parents, siblings or even grandparents. Friends and colleges do not qualify as guarantors.