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Australia’s combined capital cities now boast a median house price of a substantial $882,000, while units are not much more affordable at $800,000. Given these elevated property prices, parents frequently find themselves pondering ways to support their children in entering the property market and securing a foundation for their future. 

First-time homebuyers often face the daunting prospect of providing a 10% to 20% deposit, along with additional expenses such as stamp duty. Saving for a deposit becomes a seemingly insurmountable task for young individuals, especially considering the potential doubling of property prices over an 8 to 10 year savings period. 

This predicament poses a significant barrier for first-time homebuyers. So, how can parents play a role in overcoming this challenge? 

1. Contribute to the Deposit 

Providing a substantial sum of money that your children can utilize as a deposit is one way parents assist in getting their kids onto the property ladder. While it’s a considerable undertaking, parents may choose to incentivize their children by matching the deposit. For instance, parents contribute $100k in equity, and if the child saves $100k, a matching deposit is achieved. 

To purchase a median price home, the average deposit required in Sydney, Melbourne and Brisbane is as follows: 

City Median property price 10% deposit Loan size 20% deposit Loan size 
Sydney $1,099,000 $109,900 $989,100 $219,800 $879,200 
Melbourne $768,000 $76,800 $691,200 $153,600 $614,400 
Brisbane $747,000 $74,700 $672,300 $149,400 $597,600 
Source: CoreLogic, September 2023 

2. Guarantor on a Loan

Parents can offer financial assistance without exposing themselves to undue risk by becoming guarantors on a loan. Options such as Parental Guarantee and Family Guarantee provide limited guarantee loans, with the guarantor only liable for a portion of the mortgage, typically 20% or less. 

3. Joint Venture 

If a direct financial contribution is not preferred, a joint venture could be explored. Parents and children can jointly purchase a property with a 50/50 ownership structure – one party residing in the property, and the other treating it as an investment. Both parties benefit as co-owners of an appreciating asset. Eventually, the children may refinance and buy out the parents or sell the property, with the option for the parents to buy them out and retain it as an investment. 

With a growing trend of parents providing financial assistance, data from 2023 indicates an average contribution of $33,278 for a house deposit. Crucially, it is imperative to safeguard one’s financial security while assisting children. Seeking advice from qualified financial planners and mortgage brokers can help explore viable options and devise solutions that align with both parent and child interests, both in the present and future. 

FAQ

A: Parents can assist by contributing to the deposit, becoming guarantors on the loan, or entering into a joint venture to purchase the property together. Each option has its benefits and considerations, depending on the family’s financial situation and goals.

A: The average deposit required varies by city, with Sydney, Melbourne, and Brisbane requiring substantial amounts for both 10% and 20% deposits. For example, purchasing a median-priced home in Sydney might require a deposit ranging from $109,900 to $219,800.

A: Yes, parents can become guarantors on a loan through options like Parental Guarantee and Family Guarantee, which provide limited guarantee loans. This means the guarantor is only liable for a portion of the mortgage, typically 20% or less, minimizing their financial risk.

A: A joint venture allows parents and children to co-own a property, with one party living in it and the other treating it as an investment. This arrangement benefits both parties as co-owners of an appreciating asset and provides flexibility for future financial decisions.

A: In 2023, parents are providing an average contribution of $33,278 to help their children with house deposits. This financial assistance is crucial in helping first-time homebuyers overcome the barrier of saving for a deposit amidst rising property prices.

A: Parents should carefully evaluate their financial security and long-term goals. Consulting with qualified financial planners and mortgage brokers can help identify the best strategies to assist their children while safeguarding their financial well-being.


Phone: 1300 855 022 
Email: clientservices@zippyfinancial.com.au

Zippy Financial is an award-winning mortgage brokerage specialising in home loans, property investment, commercial lending, and vehicle & asset finance. Whether you are looking to buy your first home, refinance or build your property investment portfolio, the team at Zippy Financial can help find and secure the right loan for you and your business.

About the Author:

Louisa Sanghera is an award-winning mortgage broker and Director at Zippy Financial. Louisa founded Zippy Financial with the goal of helping clients grow their wealth through smart property and business financing. Louisa utilizes her expert financial knowledge, vision for exceptional customer service and passion for property to help her clients achieve their lifestyle and financial goals. Louisa is an experienced speaker, financial commentator, mortgage broker industry representative and small business advocate.

Connect with Louisa on Linkedin.

Louisa Sanghera is a Credit Representative (437236) of Mortgage Specialists Pty Ltd (Australian Credit Licence No. 387025).

Disclaimer:This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. This article is not to be used in place of professional advice, whether business, health or financial.

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