Helping your child buy a house: when you should and shouldn't lend a hand

Overheated housing markets like those in Sydney and Melbourne may make headlines, but it’s not just those real-estate scenes that can pose a challenge for first-time buyers. For many Australians,  scraping together enough money for a deposit, is a task that’s as monumental as it is drawn-out.

So, it’s not uncommon to hear of parents helping their grown children fund a home of their own. For some moms and dads, that kind support is part of a “living inheritance,” a chance to see their offspring make good use of what’s passed down to them. Others may be motivated by more practical reasons, wanting to see their kids to put their money toward their own property and not their landlord’s.

There is also the matter of Centrelink.  Rules surrounding pensions etc, prevent most parents giving cash gifts to their adult children, there are no rules around donating your "equity" to your adult children by way of Family Guarantee.

No matter what’s driving it, there’s plenty to consider when it comes to parents helping their grown children buy a home so that both parties can stay protected, legally and financially.

It is important that you sit down with your child/children and their Mortgage Broker and have a good discussion around exactly what is involved and if necessary, seek legal and financial advice from an independant advisor/s.