Helping your Child Enter the Property Market

August 11, 2017 - by Fletcher Rowe - in First Home Owners, Home Loans, Investment, Retirement, Stamp Duty


Fletcher Rowe | August 11 2017

It’s a daunting world for the first home buyer; skyrocketing median house prices, interest rates and an influx of lending platforms can scare off would-be home owners. Many wonder how they will save a deposit large enough to outbid seasoned investors, and parents feel helpless watching their children’s dreams of owning a home slip away. It can feel like one step forward, two steps back when it comes to saving your first deposit. Fortunately, there are many strategies we utilise to remove stress and get your child into the market right away.

The guarantor structure is a great way to boost your child’s purchasing power without laying down your own cash. This strategy is perfect for home owners who have a bit of extra equity in their home, but who are hesitant to hand over their savings or borrow against the family home. You are able to access your home’s equity to secure a portion of the new property, which means your child can get into the market even if they only have a small sum of savings.

The great thing is, as the value of the new property increases and the balance is paid down, your exposure is always reducing to the point where it is entirely relieved. Usually, you are only exposed for a few short years for just a portion of the new loan amount.

A strategy that is growing increasingly popular is investing with your children as a joint venture. This is a great way to secure your retirement, while allowing your child to enter the property market at a lower level to reduce the financial burden of home ownership. Approaching retirement with limited funds in your super can be anxiety-inducing, while many are understandably hesitant to establish a self-managed fund or invest in volatile and uncertain share markets. Property is traditionally a higher growth, lower risk investment, and could give you that financial boost to help you retire. Investing as a co-borrower with your child can ensure you’re not having to work through your 70s, while kick starting your child’s investment portfolio.

Marian and Anthony recently bought an investment property in the high-growth town of Bowral, which they are able to negatively gear to offset their income. Their new home costs them just a few hundred dollars each week to maintain.

The NSW Government is always encouraging new ways to help first home owners enter the market. Stamp Duty Concessions have been in effect since July 2017, and apply for all purchases under $800,000. If your property is under $650,000, you won’t pay a cent in stamp – which is a saving of up to $25,000.

The First Home Owners Grant (FHOG) applies to first home owners purchasing or building a brand new property up to $750,000. The FHOG is current set at $10,000 for eligible transactions, and can certainly benefit those who are just falling short to reaching their maximum borrowing. Further, you may be able to claim depreciation on the value of your home to reduce your taxable income.

If you would like your personalised buying strategy, phone us on (02) 9369 1520, or email

IFA Mortgages & Finance are a no fee mortgage broker service. Discover what it means to talk to an experienced lending expert who will develop a buying strategy that is tailored to you.

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