Teaching Life’s Valuable Lessons
P2C News - Monthly update for families building wealth 15 March 2016

Research released by RaboDirect has stated that Generation Ys are less likely to want to leave, the longer they stay living at home.

The research report revealed that 34 per cent of Gen Ys aged 26 to 29 love living at home and never want to move out.

But while it may be an act of love letting your adult children stay at home it is also a costly venture. The report also showed that parents of Gen Y ‘never leavers’ pay approximately $5,000 per year in added household costs to support them, and that many of these Gen Ys are not mindful of their mum and dad’s household budget.

Under half (38%) of stay at home children take steps to reduce utility bills such as minimising unnecessary heating or switching off lights and appliances not in use.

Is parental generosity teaching your adult children about financial responsibility or are your children getting an easy ride. Everyone would hope that a parent would be generous to a point, but if your adult children miss out on learning valuable lessons about budgeting and financial responsibility over the longer term, your love may actually create a problem.

La Trobe Financial has created a parent-to-child mortgage product (P2CTM) that aims to address some of the issues facing parents and their Gen Ys. A P2CTM Mortgage formally documents a lending arrangement between parents and their child, registering a mortgage on the security property that the child is purchasing, and then independently managing the assistance to ensure it is repaid in accordance with the agreed terms. The P2CTM product is designed to protect the parents’ “investment” without exposing their assets or credit file profile to any risks associated with their child running into difficulty with repayments.

The parents however can still provide the much needed assistance for their Gen Ys with interest rates starting as low as 3.4% per annum.

Now parents can continue to be generous, protecting their own money while teaching their children valuable lessons about budgeting and financial responsibility.

Best regards,

Martin Barry
Vice President,
Chief Wealth Management Officer

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La Trobe Financial is one of Australia's leading independent credit specialist Fund Managers. Its business includes residential mortgages, commercial mortgages, and investment services operating one of Australia's largest Credit Funds under AFSL 222213. It employs over 150 staff and has managed over AUD$10 Billion covering over 100,000 investment grade assets since inception in 1952.

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La Trobe Financial Asset Management Limited - Australian Credit Licence Number: 222213

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