One of these is what we call the Springboard, which is essentially a small top up on your parents' current home loan, to help get you to the magic 20% deposit number.
Let's say Mum and Dad own their own home with a small, $50K home loan remaining. You'd like to buy your first home and you have a deposit of $40K, made up of some savings and your Kiwisaver. You and your partner would like to buy a house for $400K, and you'd need another $40K to make up the 20% deposit number.
We'll arrange for an increase of Mum and Dad's loan for that $40K, and their home is used to provide security for the bank over that small amount you need to get up to a 20% deposit. The new loan of $40K is in all four names (yours, your partners, and Mum and Dad's). This allows all of you to see the loan and the progress you're making in paying it back. The remaining $320K you need to purchase the house is in yours and your partner's names. That is like a "normal" home loan, and your new home is used to secure that lending.The aim with a Springboard (which Westpac provide as a great product offering) is to allow you to get to a 20% deposit, without a traditional guarantee over Mum and Dad's home for the entire amount. You'll work hard in the early stages of your first home purchase to pay this amount back, and once that's done, Mum and Dad are no longer involved and you've got complete control over your new home loan.
The big benefit to you in this scenario is that because you essentially have a 20% deposit, you're able to reduce the cost of your home loan initially using Mum and Dad's help, but there is no complicated guarantee or joint ownership structure to unwind.
The same applies to Mum and Dad. Instead of guaranteeing a large home loan of $320K when they might be nearing retirement, they are only helping with the smaller $40K which is less risky for them and much more manageable.
Talk to us about the best way to make this happen for you. There are a lot of different ways to structure this and it's best for us all to sit down together and discuss how this works for everyone involved.
We love to help first home buyers into their first homes - so call us today to get expert advice and the best home loan for you.