With property prices continuing to rise across Australia, it’s no surprise that many young Australians are finding it harder than ever to break into the property market. As a result, more parents—particularly business owners and those nearing retirement—are stepping in to assist. So common is this trend, it’s now been dubbed “The Bank of Mum and Dad.”
If you’re considering helping your child buy their first home, it’s important to understand the different ways to provide support — and the potential financial and legal implications of each.
4 ways parents can help their children buy property
- Gifting a home deposit
Gifting a lump sum toward a deposit is one of the most straightforward ways to help. A larger deposit may help your child avoid Lenders Mortgage Insurance (LMI) and qualify for a better loan. However, gifts should be carefully documented to avoid future disputes or Centrelink issues.
- Providing a loan
Parents can choose to structure financial assistance as a formal loan. This allows you to set repayment terms, charge interest (or not), and outline conditions. A legally documented family loan agreement helps protect both parties and ensures clarity.
- Acting as a guarantor
By going guarantor on a loan—usually by using your own property as security—you can help your child borrow more or avoid LMI. But this option carries significant risk. If your child defaults on repayments, you could be held financially responsible.
- Buying property together
Some families choose to co-purchase property, with parents owning a share. While this can be a smart move, it adds complexity when it comes to tax implications, property title structure, capital gains, and long-term financial planning.
Important considerations before offering support
- Your own financial security
Make sure your retirement plans or lifestyle goals aren’t jeopardised by your generosity.
- Tax and legal advice
Structuring your assistance the right way is essential. A mortgage broker, financial adviser or solicitor can help you avoid unexpected tax liabilities or legal pitfalls.
- Family communication
Open dialogue and clear agreements help maintain healthy relationships and avoid misunderstandings over money.
Final thoughts: Be strategic with your support
Helping your children buy their first home can be incredibly rewarding—but it pays to plan carefully. By exploring the right structure and seeking professional advice, you can support your child’s dream of homeownership while safeguarding your own future.
If you’re ready to explore your options, speak with a trusted mortgage broker or financial adviser. They can guide you through the best way to assist — whether through a gift, loan, or co-ownership — and help you make informed, confident decisions.
In partnership with Duo Finance
This article was developed in collaboration with Duo Finance, LDB’s trusted lending partner. Duo Finance specialises in helping clients navigate the complexities of home lending — whether it’s your first home, an investment property, or supporting your family through the Bank of Mum and Dad.
To learn more about how Duo Finance and LDB can support your lending and financial needs, contact us today.
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