Historically low interest rates are giving hope to first time home buyers in Australia but rising home prices are making it harder to get the money together to get the mortgage on those dream homes. Government policies that are focused on helping first time home buyers with cash assistance on properties that are newly constructed are helping but not enough. New home buyers in Australia need more help and there is a win-win option out there.
The financial pressure on a young family to get the loan they need to buy a home is incredible and it is not made any easier by the high marginal tax rates on earned income. Along with taxes on income are the compulsory super contributions of a minimum of 9.5%. For those families who have an income coming from the government or a university the super contribution is 15.4% and 17% respectively. Making these kinds of contributions can hold back fist time home buyers from getting a loan. High marginal personal income taxes are also increasing the costs of servicing loans to owner-occupiers more than investors.
Lending money within the family
If a family member, such as a parent, considers lending money then there can be several benefits to both the parent and the child. Besides helping their child into their first home, the parent will lower their personal income tax liability and both parties will benefit by having a cleaner credit file. The lower loan amount on the house will benefit the new home owner by reducing the amount of mortgage interest that would have been accumulated over the life of the loan. The parent can possibly help by signing on the loan with the child.
If you or someone in your family is weighing the options of helping a family member by lending money to buy a house, consider that it can benefit everyone in the right situation. A free consultation at Clean Credit Debt Resolutions will help make the process easier for everyone and get a new family in their first home.