out & about
SAFEPROOFING PROPERTY PURCHASES
Since the Reserve Bank tightened its Loan to Value Ratio (LVR) restrictions as a mechanism to curb rapid house price growth, there has been much comment about how difficult it is for people to afford to buy their first home because of the increased deposit required.
T
he team at Pier Law is now seeing more instances of clients looking for ways around this financing issue. “It’s becoming quite common for parents to help their children get into their first home,” say Bill Herbison and Caroline Davey. “They might do this in a number of ways – from taking a share in a property with the child, through to lending or gifting money, or even providing a guarantee to a child’s lender secured by a mortgage over their own property.
“It’s great that parents want to help out, but there are liabilities and responsibilities associated with these various scenarios. So it’s very important for parents and children to seek legal advice as to how to proceed and to make sure they put adequate documentation in place.” Bill and Caroline explain that if parents have a share in a property a decision should be made and formally recorded in a property sharing agreement about who is responsible for paying the ongoing
Caroline Davey & Bill Herbison
operational expenses or perhaps a portion of the mortgage. What is to happen with the division of proceeds from any future sale of the property may also need to be determined and if assets are exchanged, wills should also be updated.” Pier Law welcomes enquiries from first potential home buyers and their parents about funding options. Call the team on (03) 366 5540 and arrange an appointment at any of their three offices.
Home demonstration?
No problem!
113 Blenheim Road, Riccarton, Christchurch. Ph 03 348 3460 or 0800 666 222 christchurch@moremobility.co.nz
www.moremobility.co.nz
Mike Pero Real Estate Cashmere
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