Giving your money away is not an easy thing to do, but what if it will go to helping your kids live comfortably in a home they would otherwise not be able to afford?
Every kids answer is undoubtedly, YES!
The past few years have seen a larger number of homes being purchased by parents for their kids. Parents want kids to be able to afford their own home but realise the average price of homes in Toronto, Vaughan and Thornhill are way out of reach for most young adults.
The price of a detached house in the ‘Greater Toronto Area’ has grown to $850,000 with Toronto reaching $1.2M.
No parent wants to see their child struggle with money and with today’s housing market being pushed beyond most young adults financial reach, it’s no wonder we’ve seen a surge in parents helping with that first purchase.
If parents could afford it, it wouldn’t be such a bad idea to help their kids into a home if their children can afford to make the monthly payments along with the other expenses that go along with home ownership. Many parents draw up agreement with their children that the equity that’s built after 5 years would go towards paying back their parents initial (hopefully low or completely interest-free) loan.
Keep in mind that if a parent has multiple children, they would want to equally help them out as well so planning accordingly is essential to avoiding hurt feelings down the road.
Parents should avoid “gifting” money, especially if their child is married as this can lead to serious consequences if the child and their spouse decide their marriage is over. A gift becomes just that… while a loan gives you the right to call it back whenever you want, or according to a previously agreed upon timeframe.
If their relationship goes south, parents can avoid having half their hard earned cash taken in a divorce settlement. Loans are not part of the family assets.
The best thing a parent can do is make a decision based on their personal ability and by knowing what’s best for their child. Not every kid can handle the responsibilities of home ownership.
If you have any questions about the home buying process or would like some information about the Toronto, Vaughan or Thornhill real estate market, feel free to contact me.
CONTACT ILAN NOW FOR A MORE PERSONALISED SEARCH EXPERIENCE!
Ilan Joseph is a Real Estate Broker with Sutton Group and is co-founder of a 10-person award-winning Toronto, Thornhill and Vaughan real estate team.
Since 2002, Ilan has provided more than 1700 buyers and sellers valued advice and service, enabling them to reach their real estate goals.
He’s kind of like the Bruce Willis of real estate.