One option is to become your child’s guarantor – to use the equity in your home as additional security for their home loan.
It’s a way of promising the bank that if your child fails to repay their loan, you will do so in their stead. The big benefit for your child is that it reduces their loan to value ratio. This can reduce or even eliminate the need for them to pay Lender’s Mortgage Insurance.
At the very least, it means they won’t have to save up such a big deposit. Which will speed up the time it takes them to get into a new home.
Like all big decisions, this one shouldn’t be taken lightly. If your child is unable to make their loan repayments, and you don’t have the money either, you risk losing your own home.
There are special lending criteria that apply to family guarantees – and you’ll need to take into account your own retirement needs and plans.