Lending warning issued to pensioners

Parents and grandparents are being warned to think carefully before handing over their nest egg to relatives desperate to buy a first home.

New Reserve Bank lending restrictions kick in on October 1. The measures will make it harder for Wairarapa house hunters to get a home loan with less than a 20 per cent deposit - sparking fears many first-home buyers will turn to family to help raise the funds.

Age Concern has warned members that many parents may be pressured to lend younger family members money or sign on as a guarantor for their mortgage.

Wairarapa Age Concern manager Charlie Fairbrother said it saw some cases of elder financial abuse, and the lending restrictions were "only another opportunity for it to occur". Most of the financial abuse he dealt with involved children having access to a parent's Eftpos and credit cards.

"Sometimes it can start out quite innocently with looking after paying the bills," he said. "But if something happens in their life, they see it as an opportunity to make their life better, while obviously impacting on the older people."

It was crucial older people were aware of the dangers before agreeing to give or lend money. "If they give a guarantee, they could lose everything or a substantial amount."

Age Concern chief executive Ann Martin said: "It's just alerting people to the fact that you can say no or look at other options and you do need to look after your own future."

Ms Martin recommended older people seek legal advice before agreeing to anything.

Real Estate Institute New Zealand chief executive Helen O'Sullivan suggested parents provide only a guarantee for a limited amount of money, not a whole mortgage.