Page 190 - Australian House & Garden (January 2020)

H G ADVICE

A ROOM

OF ONE’S OWN

Setting up smart saving strategies now can help you
help the next generation to purchase a home.

here’s no time like the present parents can sometimes help. “Be very guarantor to the child’s home loan.
to teach your kids good money- clear about whether you expect this “Acting as a guarantor can help
T management skills or to plan for deposit amount to be repaid, and children avoid Lenders Mortgage
their financial wellbeing, regardless of be realistic about your children’s Insurance (LMI) and ensures their

how young they are. “Encouraging financial track record and their ability money is being spent on paying off the
children to budget and save from a to repay a home loan.” mortgage itself,” says Dinos. “Your child
young age helps build behaviours that Another option to consider is may be more likely to secure a home
will serve them well later in life,” says purchasing a property together with loan and your contribution might help
Dimitra Dinos, general manager of a joint loan, which means parent them increase their borrowing capacity,
home loans for Commonwealth Bank. and child both own a stake in the but at the end of the day, if your child
“When the time comes that your kids house. Some parents enter into this can’t pay back the loan you will be
are ready to buy a home, the support arrangementwiththeexpectation responsible for repaying the debt.”
you’re able to provide depends on your thattheiroffspringwillonedaybuyout If you don’t want to (or don’t have

circumstances (and theirs). The most the means to) become guarantor there
important question to ask yourself, Helping your children are still ways you can help.
however, is whether your adult children “Manyparentswithadult kids find
establish sensible money
are financially stable and ready to take habits will set them up themselveswithextraspace in the
on the responsibilities of a home loan.” for good financial health familyhome,”saysDinos. “You could
If you’re looking to help your child in the long term. allowthemtomoveinfor a set period
get a home deposit together – either tohelpthemsaveupfor a deposit. Just
by giving them the money as a gift rememberthatthismight have an
or a loan – it’s a good idea to set up a their share of the home when they impact on your own bills and living
high-interest savings account or have more funds, or will pay back the expenses, so be certain you can sustain
a term-deposit account as soon as parental investment when the property this or ask them to pay an agreed
you can. “That way you’ll see the is sold. Family members may be your amount of rent or contribute to the bills.”

benefits of compound interest over nearest and dearest, but it’s important If you’re good with money, you could
time,” says Dinos. to seek independent legal and financial also think about becoming a financial
Many prospective first-time buyers advice before making any decisions. mentor to your kids. “Helping them
can afford monthly mortgage Parents who don’t have a lump sum to establish sensible money habits will
repayments but find saving a deposit to give or loan to their child for the deposit set them up with good financial health
be the real challenge – and this is where might instead consider becoming a in the long term,” says Dinos. #

To help improve your financial wellbeing, please visit financiallyfitfemales.com.au.
Always consider your personal circumstances before acting on financial advice.

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