Buying your first home

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Can my parents help me buy my first home?

Parents or other family members may be able to help you to secure a loan that would otherwise be out of your financial reach.  There are a variety of options available for parents who wish to help, which are listed below:
  • If your parents or other family members are willing, they may be able to use the equity in their own property to help you buy your first home sooner. In this instance, they would take out a mortgage on their own property (and pay necessary interest), to provide you with the cash to make up your deposit.
  • If you don’t have a large enough deposit to meet the lender’s criteria for a loan, but you do have the ability to service that loan, lenders may allow your immediate family members to use the equity in their own home as security for your mortgage. In this instance, your family members do not take out a loan themselves, but their property is used as security on the loan (and can be sold if you default).  This is more palatable to some parents / family members.
     
  • Another option is to take out a “Family Equity Loan”.  This arrangement makes yourself and your family member joint borrowers on the mortgage. Both are responsible for repayments.  The debt servicing calculations are based on the incomes and expenses of all borrowers.
With all of these options there are risks involved for your family member. If you can’t keep up with your mortgage repayments, your parents may be required to pay off the remainder of your loan or, even worse, sell off their own home to cover your debt. 
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