The real cost of borrowing from the bank of mum and dad
Taking handouts from your folks when you're old enough to pay bills, sink pints and vote isn't a good look. You're taking the piss, mate.
Or are you?
The idea of nabbing properties with parental coin is a bit off. But whether we like it or not, the families that are working together to get kids in the market will be better off. That's just the way the cookie crumbles, folks. So next time you pop around to raid the fridge, should you drop the suggestion that they do something useful with the equity they're sitting on? Maybe. Here's why.
Property ownership is an intergenerational issue
Tom Keel, lecturer in property, construction and real estate at Deakin University says, 'Parents have helped their kids for centuries, passing on the farm, for example. It was once embedded culture - people accepted what was their lot in life.'
'Parents will always want to help their kids,' he adds. However he acknowledges that as more people fall 'below the line', there's a stigma attached to getting into the market with help.
Yet he reckons that families with the capacity to work together should definitely breakdown generational silos for mutual benefit, especially because the ageing population threatens to add even more weight to the millennial load.
'This is an intergenerational issue because parents feeling bad if they have a house and their kids don't. It's also due to parents wanting their kids to be secure in the world, and partly so the kids can then also look after them in their old age,' Tom explains.
Nothing is free, even if it you get it from the olds
Parents are going to great lengths to help their offspring set up family wealth. They're getting creative, too. 'Parents are putting the kids' rooms on Airbnb and giving the Airbnb income to them to help financially. I see this in inner-city properties where there are separate entrances,' he says.
But even if you're lucky enough to have parents who can help you buy a home - whether they hand over cash, go guarantor or use equity in their own home - it'll inevitably have an impact on your relationship. Agreeing to work together is only as powerful as the commitment to the plan. Being successful 'involves sacrifices for all in the family,' Tom says. That might mean giving up 'big weekends', pulling back on the international holidays and perhaps sharing a car as a family so that the nest egg accumulates faster.
Tom's watched families stick to a budget and says after just two to three years they've found a deposit together. On the flipside, 'I also know many parents who wont help their kids after seeing how quickly they spend money when they have it in their hand,' he says.
If you're considering it, just make sure your relationship with your siblings won't take a hit. 'It's very hard to be cohesive,' Tom admits. That means, if one of you needs help, but two others have entered the market on their own, maybe they deserve some cash, too. For a stack of people, the golden property ticket is off the cards anyway, but Tom says even small sacrifices made as a family can result in big dividends in the long run. That might start with parents asking: 'would you like to share a car and put the savings towards a deposit?'
It might not be convenient now, but it's going to be a hell of a lot more comfortable than sharing a bedroom with your mum when you're 50.