Bank of Mum and Dad: How much parents are gifting their children for first home deposit
<p>A lot of Aussies are turning to the “Bank of Mum and Dad” to buy their first home, with parents willing to fork out exorbitant funds to help their kids.</p>
<p>Parents with children aged under 12 are planning to gift their children $33,278, on average, to put towards their first home deposit, according to new research by Finder.</p>
<p>That amount is just about a third of the average first-home-buyer deposit ($96,274), based on the average first-home-buyer loan of $481,368.</p>
<p>Victorian parents were the most generous, with plans to gift their adult children $52,716, on average, followed by parents in South Australia ($44,656) and New South Wales ($40,191).</p>
<p>Queensland parents were willing to cough up $36,497, while Western Australian parents said they would gift $31,076.</p>
<p>However, not everyone is prepared to dig so deep into their pockets as half of parents (51 per cent) said they would give their children $1,000 or less.</p>
<p>About 40 per cent of Australians aged 25-34 are expected to reach out to the “Bank of Mum and Dad” to help them buy a property, according to a recent report by the Australian Housing and Urban Research Institute.</p>
<p>Finder money expert Sarah Megginson said, without the help of their parents, many young Australians will simply be priced out of the market.</p>
<p>“Recent property price hikes, combined with interest rate rises, have made it extremely tough for young buyers to save a sufficient deposit, let alone qualify for a home loan,” she said.</p>
<p>“Buying a home also comes with new responsibilities such as managing hefty council rates and strata fees, paying for ongoing repairs and managing your money.”</p>
<p>Megginson said older Australians should make sure they “put their oxygen mask on first” before helping their kids, rather than risk damaging their own retirement fund.</p>
<p>“It’s important to consider whether you are financially secure before helping family members, and look for ways to work towards a mutually beneficial outcome.” Megginson said.</p>
<p>“For instance, you might pledge to match your kids’ home-deposit savings dollar-for-dollar, which gets them into the habit and discipline of saving, and means you don’t have to contribute as much.”</p>
<p>Parents should also ask their children to prepare a household budget to help ensure they will b able to handle further rate rises, Megginson said.</p>
<p><em>Image credit: Shutterstock</em></p>
