Being able to own one’s own house is a dream that most people share. However, for many, it is a dream that is out of reach. Property prices continue to rise while an entire generation of people are stuck renting other people’s properties. The spiralling cost of living crisis is certainly contributing to this, as inflation makes it very difficult to save up for a deposit on a home. If you’re a parent or grandparent watching your kids or grandkids struggle to get into the housing market, you might be wondering what you can do.
If you’re in a position to do so, you could help them out by either becoming a guarantor on their fixed-rate home loan or pooling your funds together to buy a house with them. But what’s the best way to approach this? This article will share some helpful tips for buying a house with your kids or grandkids. Keep reading to learn more.
Choose The Right Home Loan
Even if you have a substantial deposit or the majority of the funds required to purchase a home, you may still need to apply for a home loan. There are a variety of fixed-rate home loans and variable-rate home loans available on the market. The advantage of a fixed-rate loan is that if the cash rate is raised by the central bank, your home loan will remain at a lower fixed rate until it expires. This can be a significant advantage when inflation rises, as often happens the central bank needs to respond to increasing costs of living. A variable rate, on the other hand, can be advantageous when the central interest rate is lower, as banks will lower the rate accordingly.
When researching home loan options, consider a range of factors, including the interest rate, as well as the other associated terms, fees and conditions of the loan. Ensure that your kids or grandkids also understand the implications of getting a home loan. For many people, this is the most debt you’ll ever incur, and debt needs to be managed well to stop it from becoming too much of a financial burden.
Practical Design Considerations
Next comes the practical aspect of your decision to buy a house with your family. Are you simply pitching in so they can afford their own home? In this case, you may be listed on the title and have some responsibility for the mortgage, alongside your children or grandchildren, but you’ll continue living in your own home.
On the other hand, you might plan to move in with them. If you all buy a larger home with extra bedrooms, you could all co-inhabit the property, which could be excellent for family bonding and connection, and a great money-saver. If you value alone time, you could consider a home with a self-sustained granny flat or a separate dwelling in the backyard, so you have some distance from your kids/grandkids and can retain some independence. This allows you to live in close proximity with those who matter most to you, without everyone having to crowd into the same property.
The Benefits Of Professional Advice
Before you enter into a co-ownership agreement with your immediate family, such as your children or grandchildren, make sure that you seek professional advice from either a solicitor, conveyancer or both. They can assist you in completing the relevant legal paperwork for the arrangement, as well as provide advice on what can happen if things go south.
This means you’ll be fully informed of all the potential legal risks, and what everyone can do to protect themselves. You may feel this is superfluous, especially if you haven’t had any problems with your family thus far, but relatives can and do fall out sometimes, especially when large amounts of money are involved. By seeking professional advice, you’re doing the correct due diligence that everyone ought to do in this situation, even if you never end up needing it.
Property and Pest Inspections
Before buying a home, you’ll want to know everything you can about it and its sellers. This is a crucial tip for anyone looking to purchase a home, let alone those buying with their family. A building and pest inspection involves a qualified professional going over the home you’re considering buying with a fine tooth comb to look for defects and vermin infestation.
The last thing you want is to buy a home that will require significant structural or foundation work to make it habitable or one that has a termite or other pest inspection. A certified building and pest inspector can go over the property and provide a report on its condition. When buying a home via a private sale, you can even make your offer contingent on the inspection, thus protecting you as the buyer.
If the report turns up anything concerning, you can safely rescind your offer. You may also want to conduct an inspection before bidding on a home at auction, as you don’t want to buy a house needing a million repairs without knowing what you’re getting into.
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In this article, we’ve gone over our top tips for buying a house with your children or grandchildren. From home loan structures to legal advice to other practical considerations, we’ve covered everything you need to know about this critical topic.
If you’re planning to buy a home together with your children or grandchildren, the most important thing is communication. Go over your goals and finances together before making any big decisions. Once all of you are agreed and once you’ve determined that your finances are in order, you’re ready to start shopping around for a home.
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