Should you give your child a boost to home ownership?
Many young people struggle to purchase their first home and often parents and grandparents are very sympathetic. They’ve enjoyed the financial benefits of long-term home ownership themselves, and see how hard it is today to make that important first step into the real estate market. So should you give them a boost?
First, consider your own financial situation. Your first responsibility is to your own financial security, so you need to consider what kind of help you can afford.
Take some time to think about family dynamics. Are there siblings or other family members to consider? Will there be an issue of fairness that you need to manage?
Home ownership is a big financial responsibility. Consider whether they’re ready for this responsibility. Sometimes the best advice is to keep renting.
If your child is married or living with a partner, consider property law. Experts advise parents to structure a loan instead of gifting money. If there is a break up, the loan would be subtracted from the family property before being divided.
Always put it in writing. If it’s a loan, have a written record of your shared expectations. If it’s a gift, you must put it in writing for the lender that the child is not required to pay the money back.