Parents wishing to assist first home buyer children may consider low interest deposit loans by securing the deposit against their own home.
These loans can either be principal and interest or interest only. The cost of procuring sufficient funds for a deposit for one of the children is not necessarily great. A loan of $20,000.00 at 6% will incur an interest bill of $25.00 per week, which could be an inexpensive way of baby boomer parents assisting their children into a first home. Our property lawyers are able to introduce you to a number of lenders who are happy to enter into these arrangements.
The on lending to the children and their partners is normally done by way of an Acknowledgement of Debt, which is interest free and is not repayable unless the property is sold. It is nevertheless a debt repayable to the parents upon the sale of the property.
Where no interest or repayments are required, trading banks usually have no objection to deposits being provided in this way.