How to help your kids buy a house

As more and more first home buyers ask their parents for assistance, it’s worth considering how best to protect your family.

Summary: Advisers recommend that parents who are helping their children buy a house should always draw up a loan agreement. Parents can stipulate in this agreement that they have a charge over the property the child buys with their help. Methods that can be used to assist children buying a house include a family equity guarantee, a gift or loan, selling liquid assets to acquire an interest in the property, or borrowing against the parents’ own home, although these approaches have varying levels of risk.

Key take-out: Experts emphasise that arrangements based on equity rather than debt have lower risks. Products designed to encourage prompt repayment are also likely attractive.

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