In January of this year, Australians borrowed $22.7 billion for owner-occupied housing.

With rapidly rising house prices, getting a foothold on the property ladder has increasingly come via assistance from the ‘bank of mum and dad’.

Credit Union SA’s Home Lending Team Manager Mark Marshall says there has been a noticeable increase in the number of home loans that have included a family guarantee over the past two years.

Marshall says although the family option has been around for a while, the jump in home prices in recent years has meant that borrowers are either taking longer to save for their deposit, paying more in Lenders Mortgage Insurance (LMI) or turning to their parents for assistance.

“In the past, parents may have been in a position to gift their child some money. Now, we’re seeing more parents take up this option to use the equity within their property and support their child with a family guarantee,” he explains.

Harris Tsimiklis settled on his two-bedroom, one-bathroom homette in January. The high school maths and science teacher says when the opportunity arose to privately purchase the property at an affordable price, he decided to take action and put his savings toward the deposit.

“I was still going to be at home for another couple of years, saving the twenty percent deposit,” recalls Harris who was keen to avoid the impost of LMI.

Harris’ parents, Arthur and Aroula Tsimiklis, had previously indicated their willingness to guarantee any loan with some of the equity in their home. They ended up matching Harris’ ten percent deposit, which the twenty-six-year-old saved while living at home.

“Family guarantees are becoming more common,” says Marshall.

“Parents and step-parents see it as a way to help their children into their first home or to buy their first investment property.”

He says similar to the process for Credit Union SA’s standard home loan applications, the paperwork for the family guarantee can be completed online without the need to set foot in a branch – or to be an existing customer.

Neither Harris, nor his parents, had banked with Credit Union SA; the recommendation came from his colleague.

Harris says having “done the sums” to ensure he could easily meet the repayments, he and his parents are comfortable with the arrangement.

“I’m pretty regimented with my savings. I didn’t really think there were too many risks.”

Discharging his parents’ responsibilities to the loan is the goal for the next four years.

“I was hoping to do it in a couple, but that might be a bit tight,” he laughs.

He says the family guarantee enabled him to act decisively and sooner, and avoid the impossible game of catch up experienced by many would-be homebuyers if home prices keep rising.

“If this opportunity didn’t fall in my lap, I would have had to spend more. So, then I would have had to save more… and [for] another couple of years.”

This article is intended as general information only and has been prepared without taking into account the personal financial situation, objectives or needs of the reader. Before acting on this information, you should consider its appropriateness, having regard to your objectives, financial situation and needs. For fees and charges, please refer to our current Home Loan Interest Rates, Fees and Charges. Membership and lending criteria, fees and conditions apply and are available on request.