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Helping your kids onto the property ladder

  • NZHL
  • 12th of April 2018

As the prices of houses continues to rise, more and more these days parents and older families members are giving the younger generations a hand, to help them get onto the property ladder. If this is something you're thinking about here are some options that you could consider;

Gifting money toward the deposit

One way that many families are helping younger members into their own homes is by gifting them some money to put towards the deposit. With house prices increasing over the last few years, minimum deposit amounts can reach  $100,000+ in some parts of the country and getting the deposit together can often be the biggest impediment to people buying their own home. Most banks however do require some of the deposit to be from 'genuine savings',  the  home buyers should have  some savings themselves as well. In many cases, KiwiSaver can be considered as genuine savings.

Lending a deposit

An alternative to gifting a deposit is to lend it, with your kids paying it back over an agreed period of time, or on the sale of the property. This can be a great way of protecting the deposit if your child is in a relationship with someone and they are buying together. For any loaned deposits, it is recommended you seek legal advice and potentially draft up a Deed of Acknowledgement of Debt

Acting as guarantor

Going guarantor means putting the equity in your own home up as security for your child's loan. If your child defaults on payments you are legally responsible for the entire loan in full. As the guarantors are also liable for the repayment of the loan, generally banks would want to ensure they are able to meet all repayments and many guarantors face the issue of not being able to meet criteria to repay their own loans plus the child’s loan.

Buying a house together

You could choose to go in with your child or family member and buy a house together. This option means that you're jointly liable for the debt but on the plus side you'll also jointly benefit from any increase in the value of the house.

If you are considering helping a family member into a home take the time to consider all the options and how they will impact on you and your financial future. Investing in good advice from a professional in these situations is well worth it.


The information contained in this article is of a general nature and should not be taken as advice. It reflects the opinions of the writer only and does not necessarily reflect the opinions of NZHL (New Zealand Home Loans).

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