Parent assist home loans

Two hands holding each otherA new home loan product can help you get into the market with no deposit, and without risking your parents’ house.

Saving a deposit is one of the biggest barriers to buying your first home. Lenders require at least a 5% deposit, and with the median Australian dwelling price hovering near $550,000, this is a significant chunk of cash.

In the past, lenders offered 100%, no deposit home loans. Following the global financial crisis, these 100% home loan products disappeared, leaving guarantor loans as the sole way to buy a home with no deposit. However, an Australian lender recently released a product that helps first home buyers get into the market while easing the burden on parents to give a financial guarantee to their kids.

What is the Parent Assist Home Loan?

The Parent Assist Home Loan is a product offered through a single Australian lender, Bluebay Home Loans. It allows parents to loan their children from 5% up to 20% of the purchase price of a house. The rest of the purchase price is supplied by the lender in the form of a traditional home loan.

The parental loan is managed by the third party lender, with interest calculated at half the rate of the home loan. This enables first home buyers to buy without a deposit. If parents lend 20% of the property’s purchase price, buyers can also avoid paying for lenders mortgage insurance (LMI).

How does it differ from a guarantor loan?

The Parent Assist Home Loan is different than a guarantor home loan because parents don’t have to offer their own home as security for the loan.

A guarantor home loan allows parents to use the equity in their home as security for their child’s home loan. While this can also allow buyers to purchase a home without a deposit and potentially avoid LMI, it can also put their parents’ home at risk. This is because the parental home is offered as security on the loan, so if the child defaults on the loan, the lender can seek recourse from the parents, who could even be forced to sell their family home to repay the loan.

By contrast, the Parent Assist Home Loan is structured as a loan from parent to child. Parents don’t have to use their home as security, and because the product is offered as a legally binding loan, parents can be certain to recoup the money they lend. The loan has the added benefit of generating a return for parents.

Find a guarantor home loan now

How do I pay it back?

The Parent Assist Home Loan is repaid like a regular home loan, but your parents’ portion of the loan is repaid when you sell your home or refinance your home loan.

You can also choose to repay your parents when you’ve built up enough equity in your home. Also, if you make extra repayments on your home loan, the extra funds will be applied to your parents’ portion of the loan first.

Can my parents gift my deposit?

A parental loan could enable you to enter the property market much sooner than if you had to save a deposit, but couldn’t your parents just give you the money for your deposit without the expectation of repaying it?

While your parents can gift funds to you for your deposit, lenders generally require you to have some genuine savings of your own. The minimum amount for genuine savings is usually 5%. So even if your parents are willing to give you obligation-free funds for your home loan deposit, you’ll still have to save 5% yourself.

By contrast, the Parent Assist Home Loan enables you to purchase with no genuine savings, and no deposit funds of your own.

Learn more about saving a deposit for a home

Can my parents just purchase part of the property?

Another alternative to guarantor loans is co-owning a house with your parents. In this arrangement, your parents could buy part of the property and be listed on the title as tenants in common. This also enables you to buy without a deposit or genuine savings.

However, this differs from the Parent Assist Home Loan because having your parents listed as co-owners would make you ineligible for any First Home Owner Grants (FHOGs) offered in your state or territory. With the Parent Assist Home Loan, you could still be eligible for the FHOG, depending on the price of the home you’re purchasing.

How do I get a Parent Assist Home Loan?

The Parent Assist Home Loan is only offered through Bluebay Home Loans. You can apply through their website.

Compare some cheap home loan options below

Rates last updated May 27th, 2018
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Loan purpose
Offset account
Loan type
Your filter criteria do not match any product
Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
3.69%
3.69%
$0
$0 p.a.
80%
Enjoy flexible repayments, a redraw facility and the ability to split your loan. Plus, pay no application or ongoing fees. Refinance to a UBank loan and you could get $1,000 in your USaver account (offer conditions apply).
3.64%
3.67%
$0
$0 p.a.
80%
A mortgage with a competitive variable rate, limited fees and plenty of flexibility.
3.69%
3.69%
$0
$0 p.a.
70%
Pay no application or ongoing fees and get a flexible loan with the ability to split up to 6 times.
3.64%
4.03%
$0
$395 p.a.
80%
New borrowers or refinancers from another lender get a discounted rate with this package loan.
3.54%
3.58%
$0
$0 p.a.
80%
Eligible borrowers can get $900 cashback on this loan with a 100% offset account and a redraw facility.
3.64%
3.84%
$0
$0 p.a.
70%
Enjoy all the benefits of the Basic Home Loan and take advantage of an offset account.
3.68%
3.83%
$0
$10 monthly ($120 p.a.)
80%
Get a 100% offset account to save on interest charges, and pay no application fee.
3.69%
3.71%
$0
$0 p.a.
80%
Family guarantee option available. Enjoy flexible repayments and a low minimum loan amount.
3.52%
3.53%
$0
$0 p.a.
80%
Go from application to approval in as little as 20 minutes with a variable rate loan from this innovative online lender. Add a 100% offset account for $10 a month.
3.70%
4.13%
$0
$395 p.a.
90%
Package your loan with an eligible credit card for discounts on rates and fees, and get a 100% offset account.
3.79%
3.79%
$0
$0 p.a.
80%
Pay no application and ongoing fees with Macquarie Bank Basic Home Loan.
3.96%
3.98%
$0
$0 p.a.
90%
For a limited time, pay no application or settlement fees. You can also take advantage of a free redraw facility.
3.79%
4.06%
$0
$20 monthly ($240 p.a.)
80%
Add a Platinum Rewards Mastercard with this package loan and you could earn 150,000 Bendigo reward points (Victoria only, terms and conditions apply).
3.77%
3.81%
$200
$0 p.a.
95%
A simplified mortgage with a low interest rate and a redraw facility.
3.69%
4.06%
$0
$349 p.a.
90%
Package your loan with other AMP products and save on rates and fees.

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Credit services for Aussie Select, Aussie IQ and Aussie Optimizer products are provided by AHL Investments Pty Ltd ACN 105 265 861 Australian Credit Licence 246786 ("Aussie"), and its appointed credit representatives. Credit for Aussie Select products is provided by Residential Mortgage Group Pty Ltd ACN 152 378 133 Australian Credit Licence 414133 (“RMG”). RMG is a wholly-owned subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL and Australian Credit Licence 234945. Credit for Aussie Optimizer products is provided by Perpetual Limited ABN 86 000 431 827 (Lender). Credit for Aussie IQ is provided by Macquarie Bank Limited ABN 46 008 583 542 AFSL and Australian Credit Licence 237502. Home loans issued by the Lender are serviced by Macquarie Securitisation Limited ABN 16 003 297 336, Australian Credit Licence 237863 (MSL).

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