We all know that it can be difficult to get onto the property ladder but it isn’t all doom and gloom. According to the latest figures from CoreLogic, housing prices in Sydney have dropped 10.94% and in Melbourne 9.73% over the last 12 months, and in Perth, the prices have dropped by 3.5% in just the last 3 months, which has been encouraging first home buyers into looking at purchasing an existing property as their first home while prices are still low.
So, what options do you have as a first home buyer? Of course, you can try to go it alone with a regular mortgage, or there is still one lender that is still happy to lend out to first home buyers; the bank of Mum and Dad! Based on APRA’s (Australian Prudential Regulation Authority) latest figures, this unofficial financial organisation currently has an estimated $30 billion on loan, placing it in the top 10 of lending institutions in Australia!
But according to a report recently released by research firm Digital Finance Analytics, the number of first home buyers receiving assistance from the Bank of Mum and Dad has actually dropped from over 60 percent in 2018 to 20 percent in February 2019. This is likely due to the fall in housing prices, where the parent’s assets that they are using as collateral (likely being the family home) might not be worth as much anymore, so your parents might not be quite so willing to take the risk.
But if your parents still want to help you get onto the property ladder, there is another way that they can assist, with Parent Assist! Parent Assist is an Australian-first product, that allows your parents to loan you up to 20% of the property's purchase price, without having to use their home as security, without being on the title of the home, and without having to simply give you the money.
The way it works, is that your parents lend you up to 20% of the property's purchase price as a formal loan but at half the interest rate of your mortgage – making the repayments lower than a traditional home loan and improving the likelihood of getting your loan approved. Using Parent Assist means that you can still qualify for the First Home Owner Grant and stamp duty concessions (if eligible) and you could save thousands of dollars on mortgage insurance!
To find out more about how Parent Assist can help you get into your first home, without putting your parent’s home at risk, contact the first home experts at Bluebay Home Loans today!