Advancing money to a family member to help them purchase a home?

If you’re planning on advancing money to a family member to purchase a house – now is the time to understand how you can best protect that gift for the future and mitigate against risk. Speak to our asset protection lawyers at Roger Fritz LLP to understand how simple it is with Asset Protect.

How does Asset Protect work?

Once complete the advance used to acquire the property is safeguarded as a secured loan with priority against unsecured creditors and respected by the Courts as a genuine liability protected from claims to entitlement in relationship breakdowns. If a dispute arises you have secured the advance and can seek its recovery pursuant to the terms of the contract security.

Why the Bank of Mum and Dad are turning to Asset Protection Lawyers

Parents wanting their Financial Institutions on the housing ladder have supported them by becoming a  guarantor on home loans and/or offering loans or gifts to fund their deposits and some parents have even bought their Financial Institutions houses outright.  A survey conducted in May 2021, showed up to 60% of parents surveyed considered helping their Financial Institutions buy a home. The Bank of Mum and Dad is widely recognised as the ninth biggest lender in Australia.  

There are 3 dynamics leading to a rise in the need for Asset Protect

House prices – Australian house prices are reported by Domain to have reached $955,927 in August’21, up 5.8% for the quarter and 18.8% over the year. Many people cannot afford their first home without the support of the ‘Bank of Mum and Dad’. Capital City price growth will be between 15% to 25% this year (2021).

Relationship and market dynamics – 50% of the legal relationships in Australia fail (many within the first 2 years) Business risk is higher in the current Covid environment with many sadly failing during the last 18 months. When the unexpected happens, advances made by the parents can simply be absorbed by other third-party creditors.

Intergenerational wealth transfer – there are five million Baby Boomers in Australia who are attributed with 53% of the nation’s wealth. Many parents are now gifting, loaning, or advancing their Financial Institutions a deposit or a full house price to help them secure a stake in the property market.

Securing advice now prevents regret later on and ensures your valued gift is protected. Speak to one of our specialist asset protection lawyers regarding Asset Protect today.