Yes, they potentially can to help improve your equity position.
But like most things in the world of mortgages, it depends on how it’s structured and whether you meet the banks’ criteria.
Let’s break it down.
How does parent-assisted lending work?
In most cases, your parents (or another close family member) can support your home loan by guaranteeing part of it.
This means:
- You take out the home loan in your name (it’s your house after all).
- Your parents go on the hook for a portion of that loan, using equity in a property they already own (usually their own home).
- That portion of the loan is technically in both your names – you and your parents.
- The goal is to smash down that guaranteed part as soon as possible, so they’re off the hook again.
Why would I do this?
Let’s say you’re buying a $1,000,000 home and you’ve got a $100,000 deposit. That’s a 90% LVR (Loan to Value Ratio) – which means more hoops to jump through, and tougher bank rules.
Now, let’s say your parents guarantee $100,000 using the equity in their property. Suddenly your total equity is $200,000, and your LVR drops to 80% – which banks like a lot more. You’ve got more options, and potentially better terms.
What it’s NOT for:
Parent-assisted lending doesn’t help if you don’t earn enough to service the full loan. You still need to prove you can afford the whole loan (including the portion guaranteed by Mum and Dad).
So, it’s a tool for boosting equity, not bridging income gaps.
Things to keep in mind:
There are a few other rules and risks to understand – like what happens if things don’t go to plan, or your parents want to sell their home while they’re still guaranteeing yours. But don’t stress – that’s what we’re here for.
Final word:
If you’ve got willing and supportive parents with property equity, this could be the thing that helps you get into your first home faster. But it’s important to get it right.
Let’s talk it through and make sure everyone’s protected, confident, and clued up.
We’re here to make that conversation easy.
