For many younger Australians, buying a first home is no longer just about saving harder.
It is about getting help.
The “Bank of Mum and Dad” has become one of the biggest forces in the Australian property market, with parents and grandparents helping adult children with deposits, rent-free living, family loans or guarantor support.
Now, another trend is emerging: older homeowners using home equity release, including reverse mortgages, to help children or grandchildren buy their first home.
This is not always because parents have large amounts of spare cash sitting in the bank. In many cases, they are asset rich but cash poor. They may own a valuable home, but live on the Age Pension, superannuation, modest savings or a fixed retirement income.
For these families, a reverse mortgage can be considered as a way to bring forward part of a future inheritance — helping the next generation buy sooner, while allowing the parents to remain in their own home.
But it needs to be done carefully.
Why this trend is growing now
The timing matters.
Australia’s property market has started to soften in some areas. Cotality’s national Home Value Index fell 0.4% in June 2026, the steepest monthly fall in three and a half years. Sydney values fell 1.2% for the month and Melbourne values fell 1.0%. Despite that, national home prices were still 7.3% higher than a year earlier. (Trading Economics)
That mix is important.
For first home buyers, lower prices and less competition can create a rare opening. But high interest rates, high rents and cost-of-living pressure still make saving a deposit difficult.
Guardian Australia reported in July 2026 that first home buyers were not rushing back despite lower prices and less competition. Equifax data showed first home buyer applications in May were down 13.4% compared with May 2025, while Loan Market reported first home loan applications were down 20% in June compared with a year earlier. (The Guardian)
In other words, prices may be easing, but many younger buyers still cannot get there alone.
That is where parents are stepping in.
The deposit problem has not gone away
Even when prices fall slightly, the house deposit hurdle remains large.
The National Housing Supply and Affordability Council reported that the time needed to save a 20% home deposit increased from 9.0 years in 2015 to 11.2 years in 2025. It also found that rental affordability reached a record low, with 33.1% of median household income needed to service the median rent in 2025. (NHSAC)
That explains why family support has become so common.
A 2026 Compare the Market survey found that 34% of Australians had received, or expected to receive, financial help from parents or grandparents to buy a home. Almost half said they could not buy without that help. (Compare the Market)
Mozo’s 2025 Bank of Mum and Dad Report found the average home deposit gift had risen to $74,040, up from $69,907 in 2021. It also found that 23% of parents were allowing adult children to live rent-free while saving for a deposit. (Mozo)
So the issue is clear: younger buyers may be seeing better buying opportunities, but many still need family money to act on them.
Why parents are using home equity
Many older Australians want to help their children buy, but do not want to:
- sell the family home
- downsize before they are ready
- empty their savings
- go guarantor on a child’s loan
- reduce their own retirement security
A reverse mortgage may offer another option.
A reverse mortgage allows eligible older homeowners to access part of the equity in their home. They continue living in the property, and regular repayments are generally not required. Interest is added to the loan balance and compounds over time.
The loan is usually repaid when the home is sold, the borrower moves into permanent aged care, or the estate sells the property.
For parents helping with a deposit, this can feel like a way to provide an “early inheritance” at the time it is most useful.
That can be powerful. A deposit today may help an adult child buy before prices rise again, avoid years of rent, or secure a more stable home for their family.
But it is still a loan against the parents’ home. It is not free money.
Lower prices can create urgency
When the market cools, two things can happen at once.
First, buyers may see better value. They may face fewer competing bidders, more listings and more room to negotiate. Guardian Australia reported that capital city sales in the three months to June were down 16.2% year-on-year, with advertised supply 11% higher over the year to June. (The Guardian)
Second, buyers may hesitate. Falling prices can make people nervous. They wonder whether prices will fall further. They delay, wait and keep renting.
This is where family help can change the equation.
For some first home buyers, the missing piece is not confidence — it is the deposit. If parents can safely help bridge that gap, the buyer may be able to take advantage of a softer market instead of watching from the sidelines.
How the money may be used
Parents using equity release to help children commonly consider funding:
- part of the deposit
- stamp duty and upfront costs
- a larger deposit to reduce lenders mortgage insurance
- a top-up to help the child buy in a safer or more suitable location
- a buffer so the child is not financially stretched from day one
The Australian Government’s 5% Deposit Scheme has also changed the landscape. From 1 October 2025, Housing Australia expanded the scheme by removing place limits, removing income caps and allowing eligible first home buyers to buy with as little as a 5% deposit while avoiding lenders mortgage insurance. (Housing Australia)
That may reduce the amount some families need to provide. Instead of funding a full 20% deposit, parents may only need to help close a smaller gap.
The risks parents must consider
Helping children buy a home can be generous and sensible. But parents should not put their own retirement at risk.
Before using a reverse mortgage for a child’s deposit, older homeowners should consider:
- The loan balance will grow
If no regular repayments are made, interest compounds. Over time, this can reduce the equity left in the home.
- Future care needs may change
Parents may later need money for home modifications, health costs, in-home care, aged care or a move to more suitable accommodation.
- Family fairness matters
If one child receives help, other children may expect the same. This should be discussed before the money is advanced.
- Gift or loan needs to be clear
Is the money a gift, a loan, or an early inheritance? This should be documented properly, especially if the child is buying with a partner.
- Pension and estate planning should be checked
Large gifts or loans may have Centrelink, legal or estate planning implications. Independent advice is important.
Reverse mortgage vs going guarantor
Many parents worry about going guarantor.
That concern is understandable. A guarantee may help a child buy, but it can expose the parent’s own home if the child cannot meet their mortgage repayments.
A reverse mortgage works differently. The parent borrows against their own home and provides cash support to the child. The child’s home loan remains separate.
That may feel cleaner for some families, but it still creates a debt for the parent. The right option depends on the family’s circumstances, the amount required, the child’s borrowing position and the parents’ long-term retirement needs.
A simple example
Margaret and Ian are both 72. Their home is worth $1.1 million and they have no mortgage.
Their daughter has saved $65,000 but needs another $80,000 to buy a modest first home. Prices in her target suburb have softened, and there is less competition than last year.
Margaret and Ian do not want to sell. They also do not want to use most of their cash savings.
They consider a reverse mortgage to release $80,000 as a lump sum. Before proceeding, they work through three questions:
Can they afford the long-term impact on their home equity?
Will they still have enough flexibility for aged care, health costs or future housing needs?
Should the $80,000 be treated as a gift, loan or early inheritance?
The answer may be yes — but only after proper advice, modelling and family discussion.
How to structure the loan more safely
The safest approach to revere mortgage loan tructuring is usually not to borrow the maximum available.
It is to borrow the amount needed for a clear purpose, while preserving as much future equity as possible.
That may mean:
- limiting the amount released
- comparing lenders carefully
- considering whether any repayments are possible
- documenting the arrangement with the child
- checking Centrelink and estate planning implications
- involving all relevant family members early
- getting independent legal and financial advice
At Seniors First, we often see that loan structure matters just as much as loan approval. A reverse mortgage should be shaped around the borrower’s needs, age, home value, future plans and family goals — not just the amount a lender is willing to provide.
The bottom line
The Bank of Mum and Dad is no longer just a nice-to-have. For many first home buyers, it is the difference between buying and staying stuck in the rental market.
Lower property prices in some areas may encourage more families to act, especially where adult children have been waiting for a better opportunity. But the deposit hurdle is still high, and many parents do not have spare cash available.
For older homeowners, home equity release may be one way to help.
Used carefully, a reverse mortgage can allow parents to bring forward part of an inheritance and help the next generation buy sooner.
Used poorly, it can reduce retirement flexibility and create family tension.
The key is to get advice before making promises.
A well-structured plan can help parents support their children today while protecting their own security tomorrow.
Thinking about using home equity to help a child buy their first home?
Speak with Seniors First for a confidential discussion about your options, the risks, and how a reverse mortgage could be structured safely.
