How to help your child buy their first home

I have seen parents spending thousands of Rands monthly in school / varsity fees and sometimes buying their children their first car. Helping our children to learn to manage money is one of the best lessons we can give them because it doesn’t matter how much we earn as in the end, it is our ability to manage money that will give us financial stability. What if you help your children to buy their first property? Hopefully they would learn invaluable skills that could set them on a road to financial independence. If you want to help your working child to buy their first property, you can approach ThuthukaSA Home Loans so we can help both you and your child in this regard.

Many young people find it difficult to buy their first property for a number of reasons. One of those reasons is that they do not have money for a deposit for the home and for transfer and bond registration fees. Having money for a deposit would improve your chances of qualifying for a home loan.

Thandi has just started working and is renting a flat with her colleague because she cannot afford to buy her own. The flats in her complex cost around R550 000. She needs a 10% deposit of R55 000 to be able to buy her own flat. Thandi’s parents can help her as follows;

  • Thandi’s mom opens a Fixed deposit account and deposits R55 000 into the account
  • Because of the R55 000 fixed deposit account, the bank is now willing to grant Thandi a home loan of R550 000
  • Thandi’s mom must leave the fixed deposit for at least 4 years and not access the R55 000 in the 4 year period. She will earn interest over the 4 years in her fixed deposit account
  • For as long as Thandi does NOT miss any monthly repayments on the home loan, her mom will be able to apply to have her R55 000 + interest after 4 years

Key Points to Note

  • The term of the home loan is the normal 20 years but if Thandi pays more than what the bank wants her to pay monthly, she can pay the home loan sooner
  • Thandi cannot take a Further loan during the 4 year period while the collateral is in place
  • Thandi can choose a fixed rate or variable rate of interest
  • Thandi’s mom can apply to have her R55 000 + interest after 4 years. The release of the collateral will be subject to a property valuation and credit approval
  • After the collateral is released, Thandi can apply for re-advances and further loans on her property
  • Parents can help more than 1 child so if Thandi has other siblings, Thandi’s mom can help all of them if she can. She would have to open similar Fixed Deposit accounts for Thandi’s siblings too. She needs to put 10% of the purchase price of the property into the Fixed Deposit account for each child
  • If Thandi fails to pay for the property and it is repossessed, Thandi’s mom would also lose all the money in the fixed deposit account

Other benefits that come with this account

  • 50% discount on NCA initiation fees
  • The bank will cover 30% of the attorney bond fees up to a maximum of R4 200 only
  • You must pay the amount in excess of R4 200

You want to buy a home? ThuthukaSA Home Loans is the company to approach

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