How parents could help their kids to buy their first property

The median price of property has been rising so quickly in Sydney and Melbourne that many young adults worry they will never be home owners.

The housing affordability issue isn't just about home prices. There are social and generational factors because today's young adults are less likely to be savers.

So even as home-loan interest rates are at their lowest in more than 50 years, affordability is as much about a lack of a deposit as an inability to service repayments.

Luckily, there are options for borrowers who have decent incomes and low deposits, and it's even easier if you have supportive parents.

Recent research of more than 6000 people by Yellow Brick Road showed that many parents want to help their children to buy property. If that is something you hope to do for your kids, these are the options.

First, most lenders will consider a family guarantee in lieu of a saved deposit. If you're buying a $500,000 property, need $100,000 deposit and your parents have built substantial equity in their own  property, they can offer it as security for the deposit.

A family guarantee works when the deposit is as least 20 per cent of the purchase price. The lender accepts this security as the deposit, but the borrower is responsible for the mortgage repayments. If the borrower defaults, the lender recovers costs by selling the property, and they can take any shortfall from the security offered by the parents.

While this form of deposit-financing has increased by about 30 per cent in the past five years, many home owners don't want to risk losing their property wealth if their son or daughter fails to make mortgage repayments.

This leads to another option: the non-refundable gift. If a parent wants to help their child buy their first home, while keeping their own property high and dry, they can give a sum of money to the borrower and sign a statutory declaration that the money is a gift.

Lenders, generally speaking, don't allow these deposit gifts to exceed 50 per cent of the deposit. The other half must be savings of six months or more, so the non-refundable gift is a good way for first home buyers to double their deposit, and the parents can help without putting their own retirement plans in jeopardy.

Be aware that the ability to save a deposit counts for a lot with lenders, and where a borrower has low or no savings, the lender will scrutinise their income and their serviceability.

This situation can be looked at from another perspective: that instilling good financial habits at a formative age is a good investment. The combination of high income and low savings is no way to build financial security. The key is to save some of your income, so you can turn it into hard assets. This is something worth teaching children, especially given the number of consumer temptations foisted on young people.

If you're a first home buyer who won't get parental help with a deposit, save hard and buy the property you can afford, not the one you want.

by Mark Bouris

Please contact Antony Fung on 0425 470 111 if you have any property related inquiries.

Antony Fung

Ashfield Real Estate

www.ashfield-realestate.com.au

1300 938 931

Visit Excelsior Jones! Antony Fung reccomends it!

What not drop into Excelsior Jones in Ashfield?

 

139A Queen Street, Ashfield, NSW

Antony Fung from Ashfield Real Estate recommends to visit Excelsior Jones! 

SO WHAT DO YOU DO WHEN YOUR Surry Hills hipster-barista days start to segue into your dude-dad era? You move west, young man, to a place that has houses with child-friendly backyards - and you start taking as much care with the babycino as with the single-origin ristretto.

Case in point: Anthony Svilicich and business partner James Naylor, who used to run the buzzy Le Monde in Foveaux Street, have moved 10 clicks west and converted an old convenience store into a cool, white, big-windowed, tall-ceilinged cafe.

Svilicich is now a local (although still quietly amazed at seeing a Shetland pony in the street instead of the usual fixed-gear bicycle) and has been overwhelmed by the number of people welcoming the cafe with open arms. ''It's a beautiful, heritage-listed area with a far greater sense of community,'' he says.

 

In response to the new demographic, the menu is kid-friendly enough to have pikelets and a simple ham-and-cheese toasty as well as that milk bar classic of yesteryear, the fluorescent lime spider. There's also a good-looking cheeseburger that comes with a pile of unequivocally deep-fried chunky spuds on the side that gets every head turning each time it goes to a table.

Chef Adrian Borg bustles about the large professional kitchen dishing up snappy breakfast/brunch plates of smoky salmon rillettes and poached egg on toast and lunches of serious slow-roasted lamb sandwiches; the kind you have to sit down and eat from a plate. 

On weekends, breakfast luckily extends all day, so you don't have to get up early for what is rapidly turning into the hot order: a rich, shreddy, pork hock and potato hash tossed with nutty fried buckwheat and topped with a perfectly poached egg. Sleeping in is probably a distant, pre-kids memory anyway

.

There are a few cakey things upfront - anzac biscuits, choc-chip muffins - but I'm thinking they'll need a few more as they go along.

Excelsior Jones is new, noisy, and still a bit gawky - no matter where you sit, you think you're in someone's way - but the coffee side of things couldn't be more adult. Barista Julian Beresford runs a Five Senses custom blend through the powder-coated, matt black Synesso that's smooth, rich, and milk-friendly. Makes you feel sorry for all those hipsters stuck back there in poor, isolated Surry Hills.

Do … have the lime spider.

Don't … drive straight past, there's very little signage.

Dish … pork hock hash with poached egg, $16.

Vibe … cornershop cool.

Antony Fung
Ashfield Real Estate

www.ashfield-realestate.com.au

1300 938 931

JUST LISTED - 17/7-9 Loftus Street, Ashfield

Chic contemporary style renovated top floor apartment

For Sale - Offers above $650,000

This top floor security apartment has been superbly renovated to offer the very best in modern living. The home boasts impeccably presented interiors, with a spacious open plan living area extending to a sun-soaked balcony. Tucked away in a quiet street, the property also offers an excellent location, just a brief stroll from Ashfield Park, public transport, local schools, Ashfield's shops and Haberfield's popular Italian eateries.

Two double bedrooms, main with mirrored built-in wardrobes
Sleek renovated kitchen with timber counters and stainless steel appliances
New designer bathroom with separate bath and shower
Large open plan living and dining room, sunny balcony with decking
Reverse-cycle air-conditioning, floating timber floors, down-lights
Quiet well-maintained block, secure oversized garage/storage area

Outgoings:
Strata: $696 pq approx.
Water:$170 pq approx.
Council: $255 pq approx.

 

 Contact Ralf Baumann or Antony Fung on 1300 938 931

Office details

Onside Property
Shop 4/753 New Canterbury Rd,
Dulwich Hill,
NSW 2203
Phone: 1300 938 931
Fax: 1300 938 936
Web: http://onsideproperty.com.au
Email Office