First home buyers turn to Bank of Nan and Pop

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How Aussie Grandparents Are Helping First Home Buyers Step Into the Property Market

A new generation of generosity: from birthday money to house deposits

We all remember the little joys our grandparents used to bring—whether it was slipping us a tenner for ice cream or surprising us with a new toy. But today, many Australian grandparents are stepping up in an extraordinary way: they’re helping their grandkids break into the tough Sydney property market.

Grandparents giving more than just gifts

Recent research by Compare the Market reveals that nearly three-quarters of Aussie grandparents are financially supporting their families. Among them:

13% are lending money
9% help cover household bills
10% are contributing directly to their grandkids’ home ownership journey

And it’s not just about being generous—it’s about enabling the next generation to achieve financial stability and independence.

How grandparents can assist with a first home purchase

At CBM Mortgages, we work with clients every day who are getting a leg-up from family members. Here’s how grandparents can play a pivotal role.

Acting as a guarantor on a home loan

One common strategy is for a family member—often a parent or grandparent—to act as a guarantor on a first home buyer’s loan. This means using part of their own property’s equity as security.

Risks to consider

While this can help avoid Lenders Mortgage Insurance (LMI) and secure a competitive interest rate, it also exposes the guarantor to financial risk. If the borrower defaults, the guarantor may be liable for the outstanding amount. It’s essential both parties understand the obligations involved and seek legal and financial advice beforehand.

Gifting a cash contribution

Another option is gifting money directly. Even a relatively modest amount can make a huge difference when it comes to boosting a deposit or paying upfront costs like stamp duty.

Is a gift really a gift?

Lenders will want assurance that the cash is a true gift—not a loan in disguise. A formal gift letter, confirming the money is non-refundable and given unconditionally, can help avoid delays in loan approval.

Need help drafting one? We can assist—get in touch today.

Things to watch out for when gifting money

Protecting the financial wellbeing of Nan and Pop

It’s incredibly generous for grandparents to gift or guarantee a loan, but it shouldn’t come at the expense of their own retirement. Before making such a decision, it’s worth having an open family discussion and consulting a financial adviser.

Make sure the gift won’t:

Impact their ability to fund aged care or medical costs
Jeopardise pension eligibility or financial security
Cause family disputes over inheritance

Getting the paperwork right

In addition to a gift letter, documentation may be needed during the loan process to comply with lender requirements. Our team can guide you through what’s necessary.

Let’s make your first home dream a reality—together

Buying your first home is a huge milestone—and it becomes even more meaningful when shared with family support. But as generous as Nan and Pop may be, navigating the legal, financial, and emotional considerations can be complex.

At CBM Mortgages, we specialise in helping first home buyers secure their future—with or without a family helping hand.

Contact us today to learn more about how your family can contribute to your deposit, and what steps you can take to make the process smoother, safer, and more successful.