South Australian families are finding new ways to support their children into home ownership. More than one in 20 South Australian first home buyers is receiving support from family members to guarantee their housing loan, according to new analysis from National Australia Bank.
NAB’s research has found that 6.1 per cent of South Australian first home buyers are using the NAB Family Guarantee to get their foot in the property market. Nationally, 6.7 per cent of first home buyers are using the NAB Family Guarantees, with first home buyers in the Northern Territory and Tasmania using it the most at 14.3 per cent and 12.1 per cent respectively.
The NAB Family Guarantee allows parents or other immediate family members to act as guarantor on their child’s home loan by using a term deposit as security.
NAB Retail State General Manager Gregg Harris said the NAB Family Guarantee gave savers access to a home loan earlier than they would otherwise, while allowing their family members to earn interest from the term deposit.
“Traditionally, families have helped their children into home ownership by giving them money towards a deposit,” he said.
“These family members are now looking for innovative ways to help their children into the property market.
“The family guarantee is increasing in popularity because it allows parents to help their children to get a foot in the property market door while getting a return on that support.
“The family guarantee also provides flexibility so that customers can opt to use equity in their property as security if they don’t have access to cash in the form of a term deposit.”
The NAB Family Guarantee benefits the home buyer by lowering their Loan to Value Ratio (LVR) which would otherwise be achieved by saving a larger deposit. Lowering the LVR can help the home buyer to avoid paying lender’s mortgage insurance, which saves them money.
Australia-wide, the bulk of first home buyers using the NAB Family Guarantee are aged 20-29- (73%), but there is also a large portion aged 30-39 (21%).
“Our data shows some customers are in their 30s or 40s when they buy their first home, while at the other end of the spectrum we have also seen three per cent of first home buyers using the NAB Family Guarantee this year in their teens,” Mr Harris said.
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