Congratulations, you paid off your home loan! Your children or child has all grown up and moved out. Now you’re looking forward to your retirement.
Now its time for your son or daughter to buy their first home or business or real expensive car and the bank will not lend them the money. They say they will not lend them the money unless they have a guarantor. Your son or daughter has promised that they can meet the repayments between themselves and their partner. Please mum and dad can you go guarantor for us.
The first thing that could happen is you could lose your own home and maybe even find yourself living on the street. As harsh as that sounds, unfortunately it happens. Your son or daughter may lose their job or become ill and not be able to make the loan repayments.
If you become a guarantor, what does it mean for you? A guarantor allows the equity in their home to be used as additional security for the Borrower’s loan. This can happen in a few different ways. All the equity in your home could be used as security or only a set amount could be used. Check the contract and ensure you fully understand what is required by you if your son or daughter can not make the repayments, for example if you have to repay the loan in full or only in part.
We know they may be family but it is essential that you get independent legal advice from Brisbane Lawyers before signing anything. Never agree to any loan that is not scheduled to be repaid back by a certain date such as overdrafts or lines of credit. Do your checks and don’t get caught.
Findings of a recent real estate industry study suggest that young people are likely to be first-time home buyers. At their young age, young adults should already be thinking about their retirements. Buying a home is a good retirement investment because not only would the savers be sure that they would have a nice place to stay in the future; they would always consider such homes assets that could be used for mortgage or for instant cash whenever the need arises.
Thus, experts advise parents to always guide their children into investing in homes and real estate properties. This way, parents can be sure their kids would always be responsible about saving and earning money. Here are several practical tips that would effectively help parents assist their children who are purchasing homes and properties for future use.
Provide cash. Parents are used to giving money to children. If the young adults are finding it hard to startup their lives, parents are of course, always welcome to help. As parents, you should offer your children for you to pay for the down payments of the homes or properties they are eyeing. Other than that, you could also give them the money in a form of a gift. This way, your children can have a startup money for them to own assets. They could opt to take jobs to repay their mortgage or other dues related to the investment.
Consign a home construction loan. If you want your young adults to really be responsible and earn the homes and assets for themselves, you could opt to consign a loan for them. This way, you would be acting more as guarantors so that lenders would surely lend your children the money they need to make payments for the assets. Just be reminded that when you consign a loan, in case your young adults fail to repay the amounts, the loan would automatically be credited to you. Thus, in the long term, your credit status may be affected.
Share knowledge. If you as parents cannot in any way help your young adults in their real estate purchase, other than moral support, you can still give more. You can recommend dealers and lenders or you could give sound and useful advice to your young adults. As you see, helping is not always about the money aspect. Knowledge and information is practically more important and valuable than any other thing in the world.
As parents, it is always your goal to make the lives of your children always comfortable and easy. You can just do so much for your children. You could simply buy homes for them, but if you want to make them more responsible and able, you could opt to assist and guide them invest in homes and properties. This way, you are helping them become better and more productive people, which in the long run would be at their advantage.
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