Do you feel pressure as Mum and Dad to help your offspring with deposit?

Hey PC,
With recent house price increase across Australia.
There seems to be a clear - a trend of "Mum and Dad" bank being used to help their offspring with deposit.

What is your position and thoughts?


Open to discussion.

 

It shouldn't be a standalone decision.
It should be just one decision in a series, after years of financial education the parents give their kids, including how to manage wealth across generations.

 

We will be in a position to help our kids - and we will. However, we are also teaching them "how to fish".

A colleague mentioned that their 19 year old came to them and said she'd like to buy a house. The colleague said to us - "is she expecting us to help with that?"

I thought it was great that a 19 year old was thinking of getting in to the market. I was disappointed by the parents negative attitude to her ambition. My response would have been - that is great. What are you thinking, what is your plan?

I find it interesting that people/families think housing is a government responsibility and that governments should make it cheaper and easier for people to buy a house - yet there is no such responsibility for families to help where they can?

 

Not sure how to answer this poll, it doesn't really cater to my situation.

I feel internal pressure to want to assist my kids (all still too young to buy property, but getting older). But our assistance likely won't be in terms of deposit money. We would more likely assist in other ways (ie, us buying a property and doing rent to own for them, or going in as part ownerships, or providing subsidized living whilst they save for their own deposit, etc).

A couple of our teens have already started their own investments in shares. One of them (14 year old) is specifically looking at using his shares towards a deposit for an IP when he is old enough. He plans on staying at home as long as possible though, as he knows he is on a good wicket here, even if he is charged room and board once he is no longer in school. Lol.

 

I don't feel pressure to assist my kids with a deposit, but when the time comes, we will help them - hand up, not hand out though.

 

When we get to the point, given our plans turns out the way we want - we will be happy to help our kids.
Why not?
We're spending north of $1M since they were born to get them to where they are, so why not helping them with getting a house?

To be completely honest - all my investments are a HODL (not crypto!) strategy, hoping there will be enough passive income + super for us to comfortably shrivel and die, leaving the kids with few gold mines.
I trust them to do the same for themselves and use our wealth to build their own and pass it own to their kids.

Nothing wrong with intergenerational wealth as far as I concern.

 

Bank of Mum and Dad becomes top 10 mortgage lender
Bank of Mum and Dad becomes top 10 mortgage lender

Articles like this is quite commonly reported during 2020 to 2022.
Obviously this have been happening for a decade or so.

 

Was happy, and offered, to go guarantor but wasn't needed ... which is brilliant for them to reach that point

Would love to have a spare few $$ to throw at them, to make investment start a little easier ... but currently gearing for retirement so need to see where it all lands

 

This is the sole reason I’ve purchased an IP. It will allow me to help out my child in ten years when they might be looking to enter the property market.

 

No pressure. It's a given for my culture. If you don't help your kids, then who do you help?

Not sure if my kid will need my help, but I'll be helping her out in a big way. Nothing wrong with that.

Most important thing is she's raised to be responsible, non entitled, conscientious and charitable. As long as she meets those qualities and works towards building a productive life for herself with the skills she's acquired, I'll be helping her out big time.

 

In Sydney we don’t know anyone our age (late 20’s) that bought without parental help.

We were able to it in part to high income plus getting on the Bitcoin train early which has put us in a very good financial position.

 

Parents didn't give me anything as a deposit when I bought my first home as a 26yo, back in 2017. I was already renting for 2 years at that time and sick of it, so I had a discussion with them and was told to just buy something within my means instead of asking for a deposit handout. I bought an old 1960s house that needed some minor renos along the way, as this was all I could afford. Parents contributed $5k to the reno, which I am grateful for.

Later on, found out parents bought 3 investment homes, 1 for each of their kids to inherit later on. That was their way of trying to maintain inter-generational wealth instead of handing out everything on a silver platter.

Now, as a parent myself, I would probably help my children more on the deposit, knowing myself how hard it was as a first home buyer with no equity. Also, firstly, I would instill good financial discipline then offer to contribute around 50% of their deposit saved, as a hand up, not a hand-out.

 

Same (in my 30s)… Pretty much impossible in Sydney, unless you are a high income earner, or you buy in the sticks.

 

Not true. I'm the same age, bought in Sydney and have a small mortgage. You have to sacrifice a lot and work harder than the average. Timing is everything.

 

Totally agree BUT not with help with a deposit.

I am a big believer in educating my kids, inspiring my kids, holding my kids’ hands along their journey, being there to help my kids get the wheel back on their cart if/when it falls off, celebrating my kids achievements, …

But I haven’t/wouldn’t help my kids with deposits. I want them to be hard-working, I want them to learn from the school of hards knocks, I want them to figure it out for themselves, I want them to own their successes/failures, I don’t want them to become entitled, I want them to become resilient, …

It worked for me; it is working for them.

 

Same here, but although working well for one, not so much for the other, but she has bought a small townhouse, despite having medical issues that may affect her.

 

I think we owe them. I know its not a popular opinion on this site, but it is waaaaaay harder to buy a nice property in melb,syd v when i started out. Helping out is transferring some of the equity gifted to me by pro housing bubble policies from govts my generation voted in. Its my duty.

 

Pressure no? Obligation yes....

Like many I didn't have any help when I was starting out, but I knew what I needed to do and worked hard to get started. It took a while to build a deposit, multiple jobs and a few years into a graduate role/salary before I could put it together.

Early days, but we're teaching our kids the value of hard work and investing. That education is the most important part so they can decide what and how they want to invest. However, the market is different to 20 years ago and like it or not but that same asset I bought back in the day is now more difficult to purchase for someone in the modern version of the same graduate role/salary.

Time in the market is important here, so we'll be prepared to help so they can get in earlier than if they were doing it alone.

May not be gifted funds... could be parental guarantor... etc

 

When should one invest? As early as possible.
What if you started investing at age minus 20?

 

I want all that for my kids. And I will instill those qualities.

And I'll still help with a deposit

There's plenty of challenges left in life to overcome for them. Besides, 'helping' doesn't mean giving an entire deposit.

They still need to have a plan of saving, working towards buying a place. Then when they're on their way, I'll definitely be helping. They will do the research, the searching, the reno etc.

The goal (for me anyway) is to make them non entitled, resilient and successful in their own right. There's no rule saying if they are on their way you can't help out.

It needs to be judged on a kid by kid basis. I know some rotten kids. And some kids who are very hard working, ambitious and work towards their goals when parents decide to help them out. I'm all for it.

As long as my daughter is on her way doing all the right things with the right attitude, I'll be helping her plans big time.