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Can You Help Your Children Onto The Property Ladder In 2020?

Owning a home of your own is getting harder than ever. With spiralling rental rates, increasing cost of living and slow growth in wages, many of the younger generation are finding their dream of owning a family home of their own is getting further and further away. So if parents are in a position financially to help, it can be a wonderful thing to do – and help to give your kids security for the future. If they are already saving hard to pull together the money required for a deposit, it can still be slightly beyond reach without a parental helping hand. And with mortgage costs frequently lower than the cost of renting,your children will be able to save money in the long run if they get that first time house. So how can you help the situation?

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Gift A Lump Sum

If you can afford to give a lump sum, this will really help towards the considerable costs of a deposit. Often affording the mortgage isn’t the issue, it’s overcoming the barrier of having a high enough Loan To Value (LTV) amount. If you can supply part of this, your children could be able to get on the property ladder with a new build home. When planning this move, it’s important to consider the full picture of your own future finances and possible retirement. Speak to an independent financial advisor is critical to help you make the right move. 

Provide A Loan

If you can’t afford to gift a large amount, you could act as a lending facility instead. This can be a good option if you have access to savings that you don’t need now, but will need in the future. With interest rates at a historical low, you’re not losing out on much by not having them sitting in the back, and you may be able to make borrowing some of the amount of a deposit affordable for your kids, through either not asking for any interest or keeping it very low and the repayment terms flexible. In all these matters, it’s very important to be able to have an honest discussion about money with your family and be very clear exactly what you are expecting to be repaid and when – also get this in a formal legal contract notarized by a solicitor to avoid any confusion.

Take Out A Family Mortgage

Offset mortgages, where 100% of the property value can be borrowed, are also sometimes an option. These loans would be secured against the value of your own home, or sometimes allow you to deposit money into a savings account that acts as a security in the event of non-payment. However, if your child doesn’t keep up with payments, your own home or retirement funds may be at risk. Make sure you talk about affordability and contingency plans with your children before deciding on this option.

There are lots of ways you can help out financially when it comes to getting your children onto the property ladder, but don’t forget that emotional support is just as important too – always be ready with a cup of tea and a listening ear.

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What You Should do to Prepare Before Buying a Home

Before you begin the process of buying a new home, it makes sense to think about what you’re doing and what you’re getting into. It’s a long process and planning ahead and doing as much preparation work as possible will certainly pay off for you. It’s always going to be a challenge, but it’ll be more manageable if you prepare properly.

We’re going to discuss some of the things you might want to think about and put into place when preparing to buy a new home. There are many approaches that can be taken but we’ll cover the things that matter most as you prepare to make a real estate purchase.

What You Should do to Prepare Before Buying a Home - family house image
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Save More Than Enough Money Than You Think You’ll Need

Before you even begin the process of buying a new home, you should save plenty of money and be sure that you have enough set aside to cover the costs of the move. Of course, the deposit is the most important lump sum, but there are other costs and expenses associated with moving and buying a place that you’ll need to take into account too. That’s why it’s important to always save more than enough money than you think you’ll need.

Get Your Finances in Order Generally

Getting your finances in order and ensuring you understand your financial situation inside out is essential when you’re about to buy a home. You want to know for sure that you have enough money to cover all of the main costs, but you’ll always want to be clear about how much this will cost and that you’ll have access to money when you need it. Having access to liquid money might be necessary, so start planning ahead.

Be Specific About What You Want From a New Home

When choosing a home to buy, you should try to be as clear as you can be about what you’re actually looking for, as well as what you’re not. Be specific and don’t leave it to chance when it comes to finding the one that’s right for you. You should have a list of priorities already in place before you even set about the process of browsing the options on the market.

Get to Know the Area You Want to Move To

It’s a good idea to get to know the area that you’re interested in moving into. That way, you can get a feel for the place and how your lifestyle might work here. And you’ll also get to know a bit more about the local property market as well, and that’ll definitely be useful to you later. Places like the Perth Hub are location specific and resources like this can be really helpful when you start your search for a home in a particular place. 

Get the Right Professional Assistance

Getting the right assistance from professionals who really know what they’re doing will be important as well. A good estate agent will make your life so much easier and there are all kinds of other professionals such as reliable movers that you will need to seek out and find as you prepare to make this move. Don’t think you can go it all alone because it’s far too difficult when you try that. 

Have a Clearout

As you prepare to move house, it makes a lot of sense to take the opportunity to clear out your home. There’s no sense in keeping hold of things that you don’t really need, especially as it’ll just make the physical process of moving more difficult than it’s already going to be. Throw away or sell on things that are of no interest to you now and that you don’t see any need to keep hold of.

Clean Up in Advance

It’s always expected that the seller cleans the home before they move out and hand the keys over to the new owner. This is something that you should start to do way ahead of time, so if you want the actual moving day to be less stressful, you should think about how you can plan ahead and start cleaning up the home well ahead of time.

Buying a home and making a move means a lot of stress and hard work. It’s never easy and it’s rarely smooth sailing when it comes to buying a place and moving into it. However, if you prepare properly and go through the steps we’ve discussed above, the transition into your new place will be as smooth as it can be. 

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10 Home Loan Tips to Help You Survive Your First Purchase

In the life of an adult, there are a few times that are commonly stressful. One is getting married, another is having a child, and buying a home is another.

While it might be exhilarating to search for homes and wander through open houses, the actual process of buying a house is enough to force someone to live in an apartment forever. From the waiting to the paperwork, there is nothing else quite like buying a home. Fortunately, there are a few home loan tips from the pros that can help you survive the stress, struggle, and moments of impatience.

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1. Understand What You Can Afford

Having the biggest house on the block might be your dream, but being “house poor” is no fun. When you shop for your home, find something you can afford so you can enjoy living in your home. Learn what you can afford before you even begin to look so you do not fall in love with a house that you cannot afford.

2. Get Pre-Approved

Once you know what you can afford, it is wise to talk to a mortgage expert and get pre-approved for a home loan. This will give you credibility with sellers, especially if you want to see homes by appointment. Getting pre-approved for a mortgage is not the same process as getting a mortgage, it simply means that you have the income and credit rating that qualifies you for a mortgage of a pre-approved amount.

This home loan tip means that if you get into a bidding war with another buyer, having a pre-approval letter could give you an advantage.

3. Research Neighborhoods

If you find a home that seems like the price is just too good to be true, there is usually a reason – the neighborhood. It is amazing to consider that a similar home could range in value dramatically because of the neighborhood.

Prior to choosing a home, responsible home buyers will research neighborhoods, especially the schools, the public transportation options, the noise, and the nearby shops and other amenities. Check out how neighbors interact with each other. Look at how neighbors take care of their yards and where they park their cars. Some neighborhoods have associated fees, which can substantially add to monthly payments.

4. Prepare For The Added Costs

When you buy a home, there are more expenses than the down payment and the monthly payment. There are good-faith deposits, closing costs, inspection fees, homeowners insurance, and moving expenses. Make sure that you can afford all of them.

5. Decide What You Need Now

Many first-time home buyers will buy a house for the future. They will look for homes with several bedrooms, large yards, and plenty of places for children to play – even if they do not have any children.

Then, they have to take care of all of that space and make those massive mortgage payments. This leaves little time to consider having children because home expenses are so high.

There are also home buyers who will buy a very small home because there are just two people in the family at the time. But, then children come along and there simply isn’t time to find a bigger home and move because it is time-consuming and expensive to raise children.

Somehow, you will decide what suits your needs and your budget now and will keep you comfortable if your situation changes.

6. Get Involved In The Inspection Process

This can be overwhelming for the buyer and seller. The inspection is usually limited, so it can be helpful to ask for additional inspections. You will have to decide if the home is going to be safe to live in and if you can live in it without worrying about constantly having to repair it.

It is worth the extra money to pay for inspections for mold, insects, and radon. It is also worth it to pay for the inspector to evaluate the roof and crawl spaces. You should do everything in your power to attend all of the inspections. If you have a concern, ask the inspector to look at it the concern a second or third time.

7. Work With Professionals

It might be enticing to buy a home for a low cost or for free through your brother’s uncle’s best friend who sold houses in 1979 but still has his real estate license, but it certainly will not help you in the long run.

It might seem like a waste of money to pay a realtor, but good ones can actually make the process less stressful. Do not skimp here, or you will pay for it in other ways.

8. Save For A Down Payment And For A Problem

When you are saving for your down payment, you should also save for the first problem. Most expensive problems happen when you least expect it. The furnace might quit in the middle of a snowstorm. Your water heater will die when you are taking a shower on the coldest morning of the year. Your garage door opener breaks when you are late for work.

When you own a home, you have to pay to fix the problems that arise. And, they will arise. You just don’t know when. So, having money set aside to fix those problems makes them get fixed faster.

9. Learn How Mortgages Work

Mortgages are complicated. They are more than down payments and monthly payments. There are special home loans for first-time buyers. There are home loan programs for veterans and for people in special industries, like medicine. You can find out more from mortgage websites about the specific products that meet your needs.

Mortgages also come with options. There are ways to reduce down payments, but other costs increase. You can choose to get a 30-year mortgage or a 15-year mortgage. You can choose to have an adjustable interest rate or one that remains steady throughout the term of the loan. The options are plentiful and can be customized to meet your financial needs.

10. Learn Patience

The last of our home loan tips is to remember that the process of buying a home requires patience. When people hurry through it, problems usually happen. Others have been through the process and here is a handy stress free guide to moving. Finally, learn to work methodically and patiently through the process, so you are sure that everything will work out properly and in your best interest.

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Ways to Save for a Mortgage Deposit

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Buying your first home is a big step, and if you want to avoid falling into the trap of forever renting, there are several things you can do which will speed up the saving process. Here is a quick guide to get out of rented accommodation and to saving for a house deposit.

Whether you are looking to buy a luxury Meriton apartment or a simple two-storey home, it is likely that you won’t be able to save much money if you are renting. If you feel that you can sacrifice your personal space so that you can save, there are a few options for you.

One option is to move back in with your parents for a little while. However, only do this if you get on well with your parents and live close to them. If moving in with them will add another hour or so to your work commute, it’s hardly worth it more the extra travel expenses. Talk to them about how much you will stay, what you will contribute towards rent and how you will help out around the house.

It is also possible to sub-let your spare room and get a lodger. This will help subsidize the cost of your home and allow you to gain control of your finances and save for a deposit. Before you start searching for a new flatmate to move in, you will need to talk to your current landlord and see if they are happy with what you are planning. They may agree to either of the following options:

  • Advertise commercially for a new housemate and reduce your rent
  • Allow you to advertise and sub-let the spare room in your rented accommodation

Either way, you will be saving money on your rent and able to put more away. Be strong, and remember that this extra cash isn’t supposed to be for extra fun and set up a direct debit to go straight into your savings.

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If neither of the above are options for you, it’s probably time for you to look for a cheaper place to live. Ask around and see if any of your friends have a spare room that they are willing to rent out for a few months – remember to talk to them about rent, bills and what you will do around the house before agreeing to anything. If you have no friends with a spare room, then there are loads of websites available which advertise rooms in shared houses, such as:

A house share will be much cheaper than renting a house or apartment all by yourself, as you will be splitting the cost of the house between several people. This should enable you the wiggle room to save more money and, eventually, put a deposit down for your own home!

It can be difficult moving into someone else’s space and living with them, especially if they are family or close friends and you are used to living alone. Remember that they are probably feeling the tension too, so do your best to help around the house and not make a mess!

What Practical Help Can I Give My Child When They Buy A Home?

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For the past hundred years or so, children have always ‘had it better’ than their adults had it at the same age. But when you look at the instability in the world right now, it’s clear to see that this isn’t necessarily the case anymore. And parents of young adult children have a lot on their plates – not just financially, but practically, too.

One of the perfect examples of this is the price of buying a home these days. The ratio between the average property price and average wage has never been bigger. Work hours are longer. And parents who want the best for their children will need to contribute a lot, in many different ways.

So, if you are wondering how best to help your child buy their first home, read on. We’ve pulled together a few ideas for you that should help you negotiate the major issues.

Teaching

First of all, the best thing you can do with your kids is to help them understand the concepts of finances, mortgages, and interest from an early age. If you are new to this blog, please feel free to take a look around – we have hundreds of excellent advice for parents on teaching children about the value of money, and they can all help your child become financially literate and make better decisions.

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Planning

Parents should always be involved in the planning stages when their kids want to buy a home. It’s especially true if you are – like many other parents these days – contributing some money towards it. So, go through their finances with them, and look at a mortgage calculator with down payment details to see if the home they love will be a viable purchase. Don’t forget, while mortgage calculation tools will give your child a rough guide of what they can afford, the lender they approach might feel differently about their finances. With this in mind, it might be worth helping your kids find a professional mortgage advisor who can work with them to find a home that fits them best.

Contributing

There are various ways of helping your children out financially when they buy a home. You are allowed to gift them money each year, tax-free if below $14,000 (or $56,000 if both parents give to a child and their spouse), which a mortgage company will allow as a ‘gifted down payment.’ You can also offer a family loan – a sensible option if you want to teach your child a valuable lesson in lending and borrowing. This method means that your child gets a cheaper loan, while you can get your money out of a low-interest savings account and you could even charge your child slightly more to ensure you don’t lose any money. Finally, you can co-sign the mortgage. Using this method means you take away some of the financial obligations of buying the home – but bear in mind that you will then be under the lender’s microscope, too.

So, there you have it – any more tips to add? Feel free to let us now and join in on the conversation!