With the average Auckland house price now at $1 million, parents who have reaped the rewards of the escalating Auckland market are finding they need to help their children into their first homes.
The typical house in our biggest city now costs 10 times the median household income. It has become impossible for young people or families to get into their first home in Auckland.
This is an area fraught with emotion and very real financial risk so your admirable intentions require legal advice right at the beginning. There are many and varied issues that can arise when parents assist their children into homes including whether to treat the help as a loan or a gift, fairness to other children, repayment after relationship breakdowns, and the effect of long reaching guarantees.
What happens if the property values fall? What if the child can no longer service the mortgage? Who pays if the property needs extensive repair? If it’s an outright gift, the money you put forward may be a windfall to the child’s partner if the relationship falls apart.
A long settlement period is essential to give you time to get some advice, put in place property sharing and possibly contracting out agreements. Early legal advice can identify and minimise risks and ensure that your generous intentions do not leave lasting regrets.
Circumstances are different for all clients – for further information please give us a call.
Shelley Funnell is one of our friendly local lawyers operating from our Auckland satellite office. If you have any questions in relation to this article please give us a call on 281 3723.