HTW warns parents of guarantor downsides in Newcastle

HTW warns parents of guarantor downsides in Newcastle
HTW warns parents of guarantor downsides in Newcastle

There is an increasing trend of Newcastle parents going guarantor for their children to help them enter the property market, according to HTW’s Month in Review: March 2017.  

The valuation firm says while on the surface this all seems very noble of parents to give their kids a helping hand, but they should be aware of the potential ramifications of this tactic.

“This can cause grief in the long run if payments by the children aren’t made on time, interest rates go up or something unforeseen happens in the market,” HTW warns.

“The consequences attached to the security of the parent’s property can be compromised and potentially the parents could lose what they have worked all their lives for.

“This is where due diligence and focusing on areas where the potential for loss can be mitigated are critical.”

The firm says affordable options in the region are disappearing under booming property conditions.

“BIS Shrapnel forecasts put Newcastle’s growth over the three years to 2018 at 15%, so the time to get into the market would appear to be sooner rather than later,” it says.

However, it suggests areas such as Huntlee in the Hunter and surrounding suburbs offer first home owners attractive subsidies in the form of rebates such as landscaping packages, cash back incentives or furniture packages.

“It is easier said than done to find a suitable property under half a million dollars, but in areas such as Belmont, Swansea, Edgeworth, Boolaroo, Cardiff, Toronto, Wallsend and Barnsley and surrounding areas, there is still promise for first home buyers seeking houses,” the report says.

“The unit market is still very reasonable in sought after areas such as Charlestown, Merewether, Nelson Bay areas and New Lambton.”

A two bedroom unit at 3/6 Thurlow Avenue, Nelson Bay (above) has been listed for $399,000.

Similarly a two bedroom unit at U1/21 Edward Street, Charlestown (below) has been listed for between $385,000 to $420,000.

HTW warns parents of guarantor downsides in Newcastle

A two bedroom unit at 11/3 Intrepid Close, Nelson Bay (below) was recently sold for $599,000.

HTW warns parents of guarantor downsides in Newcastle

Similarly a two bedroom unit at 4/27 Mitchell Street, Merewether (below) was recently sold for $451,000.

HTW warns parents of guarantor downsides in Newcastle

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