PERTH & MANDURAH 08 9367 4222

08 9367 4222

shutterstock_25530808In this day and age, young adults are living at home for longer – mainly because the median house price has risen to five times the average income. These ever-increasing prices are making it extremely difficult for young adults to get into the property market.

However, the Parent-to-Child (P2C) wealth product is now offering an avenue for parents to facilitate their child’s entry into the property market without the pitfalls associated with unsecured lending. The P2C product formalises the assistance process between parent and child, documenting the arrangement, registering a mortgage on the security property, and then independently managing the assistance to ensure it is repaid in accordance with the agreed terms.

How does it work?

The level of investment from the parents may be for the full property amount or just part of the purchase price.  To ensure that the guarantors (the parents) have the final rights to their money in the event of a dispute or non-payment by the child, the parents’ contribution to the purchase price will be secured with a registered mortgage. In a situation whereby only part of the property is funded by the parents, the guarantors’ investment will be secured by way of a registered second ranking mortgage, behind the first mortgage.

A parent can make their investment individually, collectively with other family members and via company or family trust entities. It is essential that they obtain independent legal, taxation and financial advice before commencing on this method of finance also.

The key benefit to the P2C is that it will protect the parents’ investment should their child run into difficulty with repayments. Interest rates on this package start as low as 3.5 percent per annum. Contact us today to learn more.