A reader asks me how she can help her child under 18 get approved for her first mortgage.
The question arises, because accessibility to property has been greatly reduced due to increases in real estate.
Know first that a mortgage loan is granted only to adults because no minor, even emancipated, is recognized by law as capable of assuming such a debt, whether or not they have income.
How to help your child access a mortgage loan?
1 When he turns 18, make sure he builds excellent credit: educate him financially on the rules allowing him to build an enviable credit rating with a first loan or credit card.
2 Help him reduce his expenses: for example, provide him with accommodation when he has a full-time job following his studies, so that he can raise the necessary down payment more quickly.
3 Give them a loan or a gift (gift): In 2019, 37% of first-time home buyers received this type of help from a family member.
For a loan, write in a legal document all the repayment conditions (interest rate, repayment schedule) for an agreement recognized and respected without conflict.
If you opt for a donation, a confirmation letter will be required by the financial institution.
4 Buy the property and rent it to your child: This option can allow your child to enjoy the property now while providing you with a real estate investment opportunity. The amount of rent paid by your child is used to pay the costs incurred by the property.
5 Co-signer of a parent(s)-child mortgage loan: remember that all signatories are jointly and severally liable for 100% of the debt. This option is possible, but it exposes you to financial risks. Make sure you can afford this decision without jeopardizing your own future.
- Before buying a house for your child, make sure that his income allows him to pay all the costs.
- Evaluate the option of buying a duplex or triplex for the child, the rental income will help pay the expenses.
- Many parents worry that their children will have a credit card at a very young age; tell yourself that this is a very good way to empower them and show them the management of monthly payments