One of the most common ways first home buyers pull a deposit together.
Help from the Bank of Mum & Dad.
If you’re lucky enough to have parents (or anyone, really) who are willing and able to chip in, it can make a huge difference.
Here’s why gifted funds matter:
- They could get you over the line. Sometimes you’re just short of that minimum deposit a bank needs to say yes. Even a small gift might make the world of difference.
- They could save you thousands. If your deposit is under 20%, banks will add something called a Low Equity Premium which costs you more in interest. But if a gift boosts your deposit to 20% or more, you skip that extra cost. On a $1m mortgage, that could be $7,500 saved every year. Not small change.
But there are a few boxes to tick:
Banks will ask for a gift letter that confirms:
✅ It’s a non-repayable gift (at least until you sell the property)
✅ It’s non interest-bearing
✅ Mum & Dad (or whoever) won’t register a mortgage on the property title
Why all the above?
Because the reserve bank says those criteria need to be met for the banks to treat it as equity, not debt.
If you do have an agreement to pay the gifted funds back one day, you may be able to borrow the funds back from the bank later if your Loan to Value Ratio and affordability allow it. This might not happen for many years and there’s no guarantee you’ll get approved for it. But plenty of customers have done this before.
So, what’s next?
If a family gift might be part of your deposit plan, talk to us early.
We’ll help you structure it properly and make sure it works for the banks.
Let’s make the most of the help on offer!
