With no relief given to first home buyers in this year’s budget, Prime Minister Malcolm Turnbull said wealthy parents should “shell out” and buy their children houses, in off-the-cuff remarks on ABC radio on Wednesday.
Malcolm Turnbull's comments last week took social media by storm after a large number of posts relating to conversations between young Australian's hoping to enter the market and their parents.
It was a good laugh (you can find more conversations below) but jokes aside, how can parents 'shell out' and help their children buy property?
Equity
Mr Turnbull directed his comments to 'wealthy' parents, but wealthy doesn't necessarily just mean your cash rich...
If there's any positive out of Sydney's property market boom, it's that a lot of households are now rich in equity.
Equity is the difference between a property's value and the debt owing. Look at the example below:
Parent's don't need to 'shell out' cash, but they can offer the equity they have in their property to help purchase.
This is usually referred to as a 'security guarantee' or a 'family pledge loan' to the banks and many of them offer solutions like this.
This method generally removes the requirement to having a deposit, which is the hardest thing to achieve in my opinion.
When you're looking to start your property journey and mum says she won't give you a spare $150,000. Don't whinge about it, just ask if you can use her equity!
In the mean time, have a laugh :)
