Chapter 1: What is the main topic discussed in this episode?
it's the real estate podcast brought to you by ray white the largest real estate and property group in australasia and welcome to another episode of the real estate podcast available on iheart radio and also spotify and apple podcasts or wherever you get your podcast from Well it's a Queen's birthday weekend. If you have another day off today enjoy your Monday.
It is June the 6th for 2022 and coming up we're going to be talking about some legal stuff around asking your parents for help to get you into your first home. This isn't as cut and dry as it might sound.
And if you are a parent wanting to help out a daughter or a son climb into the property ladder, there are some legal considerations you have to factor into the whole equation around the money that you're bringing in. So we'll take a look at that very shortly. It's the main centre forecast with propertybuyer.com.au. And let's have a look at your weather around Australia.
And first we go to Sydney expecting a windy day and cloudy but dry and a high of 17 degrees. Melbourne expecting some showers today. Another cool one for your Monday morning. 13 is your high. Brisbane, possible rain in your forecast and a high of 21 degrees. And in Perth, it is a rain-free day. Plenty of cloud around and a high of 19. Enjoy your morning coffee.
Wake up every morning to the Real Estate Podcast. Well, Raphael Nadel won the French Open overnight. He is a machine at 36 years young. Incredibly, it's the 14th time he's won the French Open and has now won 22 Grand Slam titles. And the victory comes 17 years to the day since he claimed his first French Open as a 19-year-old back in 2005. So congratulations, Rafa.
If you've got a question that needs answering, you can email us at myrealestatepodcast at gmail.com. Well, we know that first home buyers have been struggling in the property market to gain a foothold into the market.
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Chapter 2: What are the legal considerations for parents helping children buy a home?
And it's fair to say that without a lot of parents coming to the rescue and the negotiating table, a lot of these first timers would never be able to make the deposit required and to get into the property market, especially in property markets that have been running hot for two years like a Sydney market. And we know that there's a lot of emotion when it comes to getting into the property market.
And there is an incredible relief when the parent decides to help out. But for the buyer, do they consider the various impacts a loan from a mum or a dad or both parents has? Well, let's welcome into the podcast this morning with a new podcast series called Property Contracts and Conveyancing. Sam Saad, who is a partner and owner of Clinch Long Woodbridge Lawyers at clw.com.au. Good morning, Sam.
Welcome to the Real Estate Podcast. Thanks, Craig. It's amazing to be a part of this podcast. Yes, and it's great to have you on as a regular part of the podcast. We'll be talking every couple of weeks to help guide people through what can be pitfalls and tricky negotiations, not only with property contracts, but also the whole conveyancing aspect when purchasing and doing your due diligence.
And a good starting point this morning, Sam, is for you to explain the typical scenario of what the bank of mum and dad looks like and how that arises. Yeah, that's a good question, Craig. Today it's been estimated that of loans made to help purchase a property in which the buyer will want to live in, over 50% of those loans are from the parents of those buyers.
And those parents are giving a contribution in some way to help make the purchase happen. Those contributions are often called the bank of mom and dad, which most people are using these days, especially in this hot property market that we have. Notwithstanding that we have high interest rates, people are still looking to find a foot to get into the market. It was not that long ago that that
percentage was 15%, but now it's over 50%. And the average contribution these days is about $100,000 for anyone who does lend to their child. And that figure is only increasing with inflation and all the other prices going up.
The need for bank of mom and dad arises normally because banks will not lend to her first home buyers, even second and later home buyers, because the level of finance that they require to buy that home that they want to buy particularly in the Sydney market, is just way too expensive.
This happens because banks have loan to valuation ratios they will not normally go beyond in making a loan, which is quite tough for first home buyers when they're trying to get in, or even people who are trying to get into commercial properties for the first time. Gifting can be one of those areas that you have to be very careful in when deciding to do it.
And on that note, can the parents gift the money but then ask for it back at a later date? Well, Craig, there's two ways that these loans from mum and dad can be considered. And depending on which way they go will depend on what the parents can do with that money down the track.
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