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<\/p>\nAustralia is in the grip of a housing crisis that disproportionately impacts first-home buyers. This, in turn, puts a lot of pressure on families that have the finances to help their adult children.<\/p>\n
But financial help isn\u2019t the only option for parents.<\/p>\n
If you don\u2019t intend to provide financial assistance to help your offspring enter the property market, there are other ways you can help.<\/p>\n
Making sure not to impact your retirement plans is critical. Mortgage analyst Brooke Cooper said the pressure to help children by a home was real as ownership moved increasingly out of reach for younger Australians.<\/p>\n
But parents who gave more than they could afford might undermine their own financial stability in retirement, she said.<\/p>\n
\u201cParents should consider not only their children\u2019s ability to purchase a home, but also their expected retirement income, super balance and future care needs is important, especially as living costs rise and people live longer,\u201d Cooper said.<\/p>\n
But if you\u2019ve bought your own home, you\u2019ve probably picked up some nuggets of advice offer along the way. Here are some tips you can help explain.<\/p>\n
Can you afford it?<\/p>\n
Just because the bank will lend you the money to buy a house, that doesn\u2019t mean you can necessarily afford it.<\/p>\n
It is important to point out to aspiring first-time buyers that interest rates can rise and fall, job security can change and that once you own a property, utility bills, insurance and renovation costs start piling up.<\/p>\n
Co-ownership is hard to untangle<\/p>\n
If your adult child is living with their partner and they\u2019re saving for their first home, you could rightly be concerned about the potential of a break-up after they\u2019ve purchased a property together.<\/p>\n
It is critical to explain how a formal property settlement works and to ensure that their joint ownership structure has been put together by a qualified lawyer.<\/p>\n
This conversation could include division factors and time limits for de facto couples facing property settlements. The key here is to keep accurate records of contributions to the property, including renovation costs and the size of the deposit contributed.<\/p>\n
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Guide your child through the important checks and balances required before purchasing. Photo: Getty<\/p>\n
Do your homework<\/p>\n
There just aren\u2019t enough properties to go around in Australia at the moment, with a property shortage continuing to inflate prices.<\/p>\n
Despite this, it\u2019s critical that first-home buyers choose with their head, not their heart.<\/p>\n
Guide your child through the important checks and balances required before purchasing. This includes obtaining a professional building and pest inspection, checking for structural issues and finding out through the local council whether there are any planned developments close by.<\/p>\n
Make sure they understand the lingo<\/p>\n
Explaining that lender\u2019s mortgage insurance is a once-off, non-refundable insurance paid by borrowers, what the term loan-to-value ratio means, what settlement really means, how much stamp duty will be and helping calculate the deposit required can be a huge help as your adult child navigates the purchase of their first home.<\/p>\n
Also help guide them through the First Home Super Saver Scheme and the 5 per cent deposit scheme and help navigate access, bearing in mind that the paperwork can take some time to fill out.<\/p>\n
How to budget<\/p>\n
Paying a mortgage takes financial discipline and budgeting, so it\u2019s worth having some conversations about how it\u2019s done.<\/p>\n
There are plenty of budgeting apps available, but actually populating a budget with realistic property ownership costs takes experience.<\/p>\n
Help your child to list some of the common household expenses, including a guide of average costs in your state for each line item.<\/p>\n
With the right support and advice, you can ensure your child is confident about stepping into property ownership.<\/p>\n