20/05/2025
Helping your adult kids buy homes
With it becoming more and more difficult for young people to get onto the property market, it is now increasingly common to see parents guaranteeing loans for their adult children as purchasers.
Then questions that are most commonly asked is, if in the instance my adult child cannot make the repayments, for whatever reason, what are my risks?
⢠Loans are limited guaranteeâs, meaning you do not place your whole home/security at risk, only a portion to reduce the overall loan of your adult childâs property, to 80% of the value of their home. E.g. home value $500k, 20% is $100k.
⢠The option of the home being rented out while your adult child gets back on their feet is available, limiting risk and gaining rental income to contribute to the loan.
⢠If the home is sold and there is a residual balance outstanding, the loan is still the responsibility of your adult child and is secured by your home until the debt is paid off. E.g. home is sold for $500k, outstanding debt was $530k, once sale settles a residual loan of 30k is remaining and is secured by the guarantee property until the loan is paid off.
So, in the instance the circumstances of your adult child changes and they go through some hardship, the child and the guarantees have options to limit the risk to all parties.
First Homeowners are not affected by guarantee loans, the First Homeowners Grant/s are still available to the adult child who has never owner occupied a home.