First home buyers can now enter the property market with just a five per cent deposit, and no mortgage insurance, under the Albanese Government’s expanded Home Guarantee Scheme.
But while the reforms promise to fast-track ownership for many, family law experts are sounding a note of caution.
Accredited Family Law Specialist Liz Catton warns that first home buyers need to think beyond the contract of sale and ensure their investment is protected.
“With more first home buyers entering the market under this scheme, which was brought forward to start this week, we are strongly encouraging people to consider whether it may be appropriate to enter into a Financial Agreement if your purchase is made while you are in a relationship. A Financial Agreement can be used to protect your assets – in this case, your first home – from the cost, stress and delay of court proceedings, should the relationship break down,” Liz said.
Financial Agreements (commonly referred to as prenuptial agreements in the US or BFA’s) are legally binding contracts under the Family Law Act where parties can agree how assets, liabilities and financial resources will be divided if a relationship ends. These can be entered into, before, during or after a de facto relationship or marriage begins.
Liz explained that parties’ should really consider seeking experienced family law advice about ways to best protect the financial contributions they make including contributions either by way of gift or loan through the ‘bank of mum-and-dad’ – which is becoming increasingly more common.
“We are seeing more parents providing loans or contributions to help their children buy their first home. A properly drafted loan agreement entered into with parents or other family lenders and a financial agreement will often be the best way to protect treatment of a gift or loan if the child’s relationship later breaks down,” she said.
