By Jesse McPherson

You’ve no doubt heard the phrase “Bank of Mum and Dad” tossed around in the media where the tone makes it sound like a new-age trend. But in reality, it’s been around for as long as home loans have existed. What’s changed is the scale. At the same time, the perception among younger people is that home ownership is drifting out of reach. And for some, without help, it might be. We’re increasingly seeing two streams: those who benefit from intergenerational wealth and those who don’t.

It’s Not All About the Money (But Yes, Sometimes It Is)

The most straightforward way to help is gifting a deposit. If you’re in a position to do that, fantastic—it’s clean, simple, and avoids the complexity of paperwork. A lot of parents take the view, “They’ll get it when I pass anyway, I’d rather enjoy seeing them benefit from it now.”

The equity baby boomers now hold in their homes is substantial, and that gives them more firepower to help their kids break into the market.

Research from Digital Finance Analytics suggest that the average amount parents give children to buy a home is over $110,000 which has risen substantially since 2012 where parents were contributing around $25,000. Sydney parents give much more – around $212,000 on average. There also appears to be a more recent trend towards grandparents helping out too.

Creative Options for Supporting a Home Purchase

But if you’re a parent wanting to help—or an adult child looking for support—there’s more than one way to skin the housing affordability cat. Let’s explore how parents can give their kids a leg up, what options exist beyond just handing over cash, and the key pitfalls to avoid.

But for those people who don’t have a spare $100k lying around there are some other creative options. Beyond a straight cash gift, parents have other ways to help:

1. Security Guarantee (Guarantor Loans)

A common route is using the family home as additional security for your child’s loan. This doesn’t mean you’re covering their repayments—it just means the bank has extra collateral, which can help avoid lenders mortgage insurance and reduce the required deposit. It’s important that this be structured to limit your liability to only the amount required to bridge the deposit gap.

2. Cash Held as Term Deposit

Some banks allow parents to provide a term deposit as security. The money stays in your name, you earn interest, and it’s “unlocked” once your child builds equity. This can be a good middle ground if you want control over the funds while still helping.

3. Co-Ownership or Buying Together

Parents can also go on the title as co-owners. This boosts borrowing power and can make things cleaner for banks. But it comes with tax and estate planning implications—only one party can claim the principal residence exemption, for example—so it’s essential to get advice.

4. Parents Buy and Rent to the Kids

In some high-net-worth situations, parents buy the home and rent it to their children. The kids cover the mortgage and may eventually inherit the home. Again, this works best with a solid estate plan in place.

Be Realistic About Risks

With any option, communication is key. Parents need to be clear on the risks—and have a plan to get out of the arrangement if needed.

For example, if you go guarantor, we recommend setting a goal to remove that guarantee within a couple of years. That can be achieved by a combination of property value growth and your child making extra repayments. Having an exit plan reassures everyone involved.

There’s also the legal minefield when it comes to gifts versus loans. If you give money but don’t call it a gift (to protect against relationship breakdowns), the bank might treat it as a debt, which reduces your child’s borrowing capacity. If you do call it a gift, it can complicate things down the line—especially in estate disputes. We always recommend getting legal advice and having a written agreement, even if you hope it stays in the drawer forever.

Navigating the Kids “What Ifs”: Protecting Family Wealth

One of the biggest concerns parents have when helping their kids into the property market isn’t about the kids—it’s about what happens if things go wrong in their relationship. And it’s a valid concern.
With rising rates of divorce and more blended families than ever before, it’s not unusual for parents to say, “I want to help, but I also want to make sure the money I give stays in the family.” That’s where things can get tricky, and where getting good advice matters.

A common strategy parents try is to avoid calling their help a “gift”. Instead, they’ll say it’s a loan, or they’ll include some kind of repayment condition—like “pay us back when you sell the house.” On the surface, that sounds sensible. But banks need clarity. If they don’t see a signed declaration that it’s a non-repayable gift, they’ll likely treat it as a debt, which can actually reduce the child’s borrowing capacity.

This creates a bit of a legal grey area. If you say one thing to the bank and another thing in a family agreement, courts have sometimes ruled that the bank’s version wins out. So it’s crucial to align the legal paperwork with the reality of what everyone expects—and to be very clear about whether you’re gifting or lending.

Some families choose to draw up a legal agreement, especially if the funds are being provided as a loan. This can outline repayment terms or what happens in the event of separation. And while it might feel uncomfortable to formalise things with your own children, it can save a lot of heartache later.

If you’re not comfortable giving money directly, then the strategy of offering security instead of cash might be a better option. For example, using your property as security on their loan means you’re helping them get in the market, but the funds never leave your hands. And because the goal is always to remove that guarantee once the kids are financially stable, it gives parents peace of mind and a natural “exit plan” if things change.

Holding money in a term deposit in the parents’ name is a variation on the same theme.

At the end of the day, every family is different, and there’s no one-size-fits-all approach. But if you’re a parent considering helping your child, it’s worth thinking ahead: what if they separate? What if they remarry? What if there are multiple siblings involved? It’s these questions that often determine whether help today becomes a gift… or a headache.

Getting advice from a broker—and, importantly, from a lawyer—can help ensure that your generous support achieves what you hope it will, without unintended consequences.

Parents have “What Ifs” too

Parents should also consider life’s curveballs in their own life and how that might impact. What happens if they divorce, pass away, or experience financial difficulties? These events can have real consequences for the structure of the loan and property ownership. Joint tenancy, estate plans, and family law issues all play a part.

Expectations and Family Culture

Interestingly, a lot of what we see comes down to family culture and expectations. Some families instil the value of property ownership from an early age. The kids save aggressively, buy modestly, and get into the market young—even if it means moving to a regional area or settling for a fixer-upper. Others might delay entry until their late 30s.

There’s no one right path, but having realistic expectations helps. Homeownership doesn’t have to mean the dream house on day one—it can be a stepping stone. Sometimes, the best help parents can give is encouraging their kids to take the first step, even if it’s not perfect.

Sometimes Parents Aren’t Needed at All

Interestingly, sometimes the assumption is that parental help is needed when it isn’t. We’ve had clients come in saying, “We’ve got Mum and Dad ready to help,” only for the numbers to show they can buy on their own.

That’s always a great moment—empowering people with the facts to make confident decisions, and maybe even sparing the parents from dipping into their retirement savings.

So, What’s the Takeaway?

If you’re a parent wanting to help—or an adult child hoping for help—it’s essential to have the right conversations, both within your family and with a professional. A mortgage broker can map out the full range of options, test serviceability under different structures, and help navigate the legal and financial considerations.

Helping your kids doesn’t mean putting yourself at risk. With careful planning and open dialogue, it can be a powerful, rewarding way to give them a head start in an increasingly challenging property market.

Disclaimer

This article has been prepared by a division of People + Partners and is not financial advice and is not provided under the AFSL of Fortnum Private Wealth.