The concept of parents lending money to their children to help with property purchase is as old as time itself. However it has always had limitations and poses risks for the parents.

Downside for the Family Pledge / Parental Guarantee

• Parents have traditionally gifted monies to their child which can leave parents and the extended family exposed from an estate planning and wealth protection point of view. The other option requires the parents to offer additional security which is effectively allowing the banks to have cross collateralisation over the family home which creates potential risk.
• Life events do happen and situations where children run into financial difficulty with events such as: employment uncertainty; changes in matrimonial status; and/or, health related issue etcetera may occur.
• In the age of many blended families there are sometimes limitations on the ability of parents to secure property which is often owned jointly with a non-parent spouse and this can cause stress between family members.
• Parents sometimes have the belief or attitude that what they do for one child they should do for other siblings which is difficult if there is only one property for the additional security under the family pledge or parental guarantee situation.
• In addition, a family pledge and/or parental guarantee is also somewhat discriminating because it is based on the financial success of the parents and does not allow if the parents have in their own life been subject to events such as health problems, financial difficulties or relationship breakdowns.

Benefits of the MINI D Loan option!

• The MINI D Loan allows investors to provide financial assistance with limited risk.
• The process is well documented and can secure monies advanced by any Lender. A well document loan is essential in amicably resolving family disputes or estate management if they arise.
• Due to the structure of the MINI D Loan the Lenders have the ability to request an interest rate that cannot only assist the Borrower with a lower interest rate whilst also replace or improve the income the Lender would have otherwise enjoyed from term deposits or other alternate investments.
• In addition, subject to the Lenders financial structure and suitable financial advice, there may be tax advantages available for the Lender.