Ian and Sharon, 63 and 58, are gearing up for a comfortable retirement in Kew, Melbourne where their home is valued at $3.5 million. Their adult child Josh knows this home well and is well aware of the hard work and sacrifices put in by his parents to make their dream a reality.

Josh has started a new family in recent years. However, he is also currently trying to purchase his first home - and his family would prefer to help him out now rather than later when property prices are likely to be even higher.

Though Ian and Sharon are currently focused on building retirement wealth and emergency funds, they can see the pinch Josh is in and want to do what they can to help.

The Solution?

Ian and Sharon were reluctant to use any of their current investments and superannuation which both form an important part of their retirement plan.

Instead, they laid out a carefully considered financial plan with Josh and, after reading about Inviva’s Equity Empower, found the perfect financial tool to make it happen.

Ian and Sharon opted for a loan of $240k allowing them to lend Josh $200k to help him secure a deposit on his first home, and the extra $40k was set aside as a line of credit intended for drawdown over the next 4 years as needed.  

With the lump sum, they were able to help Josh place a deposit on a property that truly suits the needs of his young family. With the line of credit, Ian and Sharon were able to shore up an emergency fund – allowing them to truly focus on building their retirement wealth. As a bonus, Josh was able to increase his budget and purchase closer to his parents than they originally thought – keeping this tight-knit family together.

As a family, they decided that providing the funds as an interest-free loan would be the best option. This way Josh can repay his parents for their assistance without compromising his ability to build financial security at the start of his property journey and this early stage in his life. Ian and Sharon intend to make interest repayments while continuing to work, and will pay off the reverse mortgage with the funds they receive back from Josh in a few years.

The family were delighted with the resources offered by Inviva in helping them make their decision. Josh used Inviva’s Parents and Children Calculator, which gave Josh a comprehensive view of key financial considerations concerning his deposit. Josh was able to calculate the approximate time it would take to save his deposit, the potential costs of waiting to buy, and what it would take for Ian and Sharon to help out now.  

The calculator made clear other key considerations such as his eligibility for government grants, avoiding Lenders Mortgage Insurance, the funds required to meet different deposit requirements and how Josh could pay his parents back by refinancing his home loan down the line.

The family also used Inviva’s free educational resources to help them navigate the nature of providing financial support within the family. All in all, these resources simplified an otherwise daunting process, and made the benefit of helping Josh out now clear to everyone.

By bringing forward some of the wealth that would have eventually been passed onto Josh, Ian and Sharon have set the entire family up for success – with two properties now in the family. They also have the peace of mind knowing that their son is safely set up and are delighted that they get to see their young grandchildren so often. The whole family is now closer than ever before!

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The information in this article is general in nature and does not take into account your personal circumstances, objectives and financial situation. Terms and conditions, fees and charges apply.