Helping your kids with their deposit? Here's what you need to know

Getting on the housing ladder for young Australians is getting harder and harder.

House prices are high, supply is limited, saving is hard, and borrowing is both expensive and complicated, especially for first-time buyers.

As property prices in 2025 remain high, it is still harder than ever for young Australians to get their foot on the property ladder.

It’s no surprise therefore that the Bank of Mum and Dad is one of Australia’s biggest lenders. But for parents it’s risky. If you lend to your children, it can restrict your own ability to borrow. That’s especially worrisome if you’re a property investor.

So, who's looking after the parents? Yes, unaffordable housing feels like a permanent problem, and you want to help, but you have to be cautious and realistic.

In this blog, we’ll look at the Bank of Mum and Dad, ask how you can minimise your risk, and consider some alternatives to taking on more debt yourself.

The Growing Role of the Bank of Mum and Dad

Given the competitive market, it’s natural for concerned parents to help give their children a leg-up. In fact:

• 15% of parents lent or gifted money to their adult children for a home deposit.
• 5% went guarantor for them on a mortgage, a recent Finder survey found. 
• 4% provided support by paying their kids’ mortgage.

So, it’s no surprise that the Bank of Mum and Dad is one of Australia’s biggest lenders, with about $31 billion in outstanding loans in 2023, according to research from Digital Finance Analytics.

They are among the top ten lenders, dishing out an average of about $79,000, roughly what you need for a deposit on a typical entry-level unit.

Coming up with the hefty deposit is one of the biggest hurdles for new entrants to the property market. Demand outstrips supply, prices rise, and banks make borrowing harder. First-time buyers face high interest rates, hidden fees, and lender’s mortgage insurance (LMI), which runs into the thousands of dollars.

How Parents Are Affected When Helping Kids Buy Property

But have you thought about how it affects you?

Firstly, if you refinance your own home to take cash out of the equity you’ve accumulated, you’re essentially borrowing more money. On top of that:

• If you haven’t fully paid off the mortgage, your repayments will increase, and it will take longer to pay off.
• If your loan-to-value ratio tips above 80%, you could be charged LMI – the very cost you were helping your kids avoid.

If you’re close to paying off your property and thinking about retirement, a cash-out refinance could scupper those plans. You may need to delay retirement to afford the repayments.

Then there’s the emotion of tying your own financial wellbeing to risks taken by your kids. What if you think they’re buying the wrong property? What if something goes wrong, and they’re forced to sell? You might feel the strain on your family relationships, not just your portfolio.

Minimising Risks with Clear Agreements

Don’t make the mistake of thinking that formal agreements undermine the sentiment of what you’re doing. Lending your children money is incredibly generous but has real financial implications.

So, what should you do? Godfrey Dinh, Founder and CEO of Futurerent, advises that it’s a good idea to keep any financial agreement with your children clean and simple.

“It can get complicated when parents borrow against their own property to help out with a deposit, or act as a guarantor for their child’s loan,” he says.

So, don’t hesitate to seek legal advice and put together a straightforward agreement, setting out the terms and boundaries of the loan. That way, you reduce the risks.

Alternatives to Refinancing

An alternative is to offer cash straight up.

“If you have the ability to simply provide a cash contribution, you won’t need to worry about impacting your own borrowing capacity or being liable for your child’s loan if they’re unable to make the repayments,” Godfrey says.

“While a lot of people have equity in their property, they don’t necessarily have the free cash. This is where Futurerent’s been able to help a number of generous parents helping their kids buy a home.”

How does it work? Instead of a long, drawn-out application that pushes your credit score down and your debt up, with a few simple pieces of information you can get an advance on up to two years of rental income from your investment property.

What does that mean in practice?

• You don’t take on any new debt, protecting your equity and your credit score. 
• Futurerent receives a proportion of the rent from your tenants for a fixed period and the fee for receiving the advance won’t change.
• You have more freedom about how you use the money than a loan.

In other words, a clean, one-time cash contribution that protects your borrowing capacity and your retirement plans whilst allowing you to support your children.

Practical Steps for Parents Considering Helping with a Deposit

How do you get started? Make sure you put all the practical elements in place and answer the key questions up front, to save them becoming an issue further down the line:

1. Set yourself a limit – The Bank of Mum and Dad shouldn’t be limitless. Have a long, hard think about how much you’re willing to lend or gift and how much your kids actually need.
2. Consider a cash contribution – It could be a good idea to avoid using your own property as security, which could be risky and costly down the track. A pure cash contribution could take those risks out of the equation.
3. Sit down with the kids – Make sure everyone is on the same page – is it a loan or gift? How much are you ready to offer? If you’re opting for a loan, consider getting it in writing in a formal loan agreement.
4. Understand your children’s financial habits – Be certain that your children can and do save regularly before you commit to lending or gifting them money. If you’re going guarantor for them, make sure they can make repayments over a long period.
5. Consider other financing options – Could grants or savings plans help you achieve the same goal without a cash injection from Mum and Dad?

Lastly, if you are putting your own money or equity in, consider reviewing your overall financial situation with a professional before committing. It’s better to be realistic at the start than to pull back down the line.

Real-Life Scenarios

For example, Mark and Sue want to help their daughter purchase her first apartment, but without risking their retirement savings. By unlocking $50,000 of rental income with Futurerent, they provide the deposit without undermining their financial goals.

Or take Ravin. Ravin used Futurerent to pay down loans so that he could purchase a unit for his daughter. With the banks, he says, he would wait weeks to get through the process. Futurerent, in contrast, comes without the hassle.

Support Your Kids with Heart AND Head

Whatever support you choose to give your kids, it’s always going to be an emotional decision.

But as we’ve laid out, it’s not a case of heart over head. Instead, by minimising risks, looking at all the angles, and asking the right questions at the start, you can make the right decision for your children and your finances.

The great thing about having Futurerent is that it takes away a lot of headaches that come with a loan. It’s safe, transparent, and flexible in a way that cash-out refinancing so often isn’t.

Want to help your kids get on the property ladder without sacrificing your own financial security? Get in touch and learn how Futurerent can help today!

FAQs

1. How much rental income can I unlock upfront with Futurerent?

You can unlock up to two years of rental income in advance.

2. Is it better to go guarantor or gift a deposit?

Gifting a deposit is often safer, as it avoids impacting your borrowing capacity or tying your financial security to your child’s loan.

3. What happens if my child cannot make their mortgage repayments?

If you’re a guarantor, you could be liable for the repayments; if it’s a gift or loan, it’s vital to have clear terms in place to manage any risks.