How Baby Boomer Parents Gift Kids a Home Deposit with Reverse Mortgage

By Darren Moffatt

November 10, 2023


interest rate on reverse mortgage

It’s no secret that the property landscape in Australia has undergone significant changes over the years. Owning a home, a deeply valued goal for many Australians, has become increasingly challenging, especially for the younger generation. 

In today’s market, property prices are continually rising, pushing the dream of homeownership further out of reach for many young individuals. Check out this graph from the The Australian Institute of Health & Welfare 


This challenge is highlighted by recent data from Finder. In New South Wales, it takes a staggering 20 years to save for the average house and 16 years for the average unit. 

The demands of substantial deposits, along with fluctuating interest rates, add further complexity to achieving this milestone. The journey to homeownership now involves navigating these high barriers, reflecting a significant shift from past decades.

This is where a potential solution emerges. 

By considering the option of gifting towards your kids’ home deposit with a Reverse Mortgage, you’re doing more than just contributing financially. You’re providing them with a significant advantage, a foundation on which they can build their future. 

The act extends beyond money—it’s about securing a stable start for them in an ever-evolving housing market. It’s an investment in their future, bringing both emotional and financial benefits to the family.

So, if you’re keen on helping your children step onto the property ladder or giving them a leg up in this increasingly challenging housing market, a Reverse Mortgage might just be the key.

[ Related Post: Will a Reverse Mortgage Affect My Kids’ Inheritance? ]

Benefits for both seniors and their kids

Venturing into the world of Reverse Mortgages for gifting purposes isn’t just a one-sided affair. Both you and your children stand to gain from this decision, creating a win-win scenario that offers peace of mind and a brighter financial horizon. Let’s unpack these benefits, shall we?

For the Seniors (that’s you!):

  • Peace of Mind: There’s an undeniable comfort in knowing you’ve played a pivotal role in securing your children’s future. With the ever-challenging property market, providing them with a head start can ease any concerns about their housing stability.
  • Financial Flexibility: By tapping into a Reverse Mortgage, you’re accessing the equity you’ve built over the years without the need to sell or downsize. It allows you to give generously while retaining your living situation.
  • Strengthened Family Bonds: Actions often speak louder than words. This significant financial gesture can further cement the bond between you and your children, showcasing your support in tangible ways.

[ Related Post: Reverse Mortgage or Downsizing: Which Option is Best for Your Retirement?

For the Kids

  • A Leg Up in the Property Market: With your support, your children can navigate the property market with more confidence, either entering it more easily or upgrading as their family needs change.
  • Reduced Financial Burden: With the added boost from your gift, they might be able to avoid or reduce the need for high-interest loans or navigate the challenges of saving for a larger deposit.
  • Appreciation of Family Support: Beyond the financial aspect, there’s an emotional component too. Recognising the sacrifice and support from their parents can instil a deep sense of gratitude and familial pride.

How a Reverse Mortgage makes gifting home deposits possible

Using a Reverse Mortgage to give your children a step-up in the property market is an enticing thought. 

Here’s a look into how the gifting process typically unfolds, leveraging the power of a Reverse Mortgage:

  1. Determine Your Eligibility: Before anything else, assess if you’re eligible for a Reverse Mortgage. While criteria may vary, most lenders target homeowners aged 60 and above in Australia.
  2. Consult with a Financial Advisor: It’s always wise to discuss your intentions with a financial advisor. They can provide insights into the implications and benefits of gifting using a Reverse Mortgage.
  3. Apply for the Reverse Mortgage: Approach your chosen lender and begin the application process. They’ll evaluate your home’s value and determine how much you can borrow.
  4. Receive the Funds: Once approved, you’ll receive the funds. These can be in a lump sum, regular payments, or a combination of both, depending on your preference and your lender’s offerings.
  5. Gift to Your Children: With the funds in hand, you can now proceed to give the desired amount to your children. This can be used towards their home purchase, ensuring they have a substantial footing in the property market.
  6. Understand the Implications: Remember that such a significant gift can have potential implications on tax, inheritance or even your Age Pension. The amount you give and its effect on your estate’s value might influence inheritances in the future, so always check with Centrelink. 

It’s crucial to note that while this process provides a general guideline, the actual steps and criteria might vary depending on the lender and specific Reverse Mortgage product you choose. Always ensure you’re well-informed and have consulted professionals to make the most informed decision. 

Consult Reverse Mortgage Experts at Seniors First 

Exploring the option of a Reverse Mortgage is a significant decision, one that requires clear understanding and guidance. At Seniors First, we believe in the importance of making informed choices.

Before signing any loan documents, it’s crucial to consult a professional. The terms, implications, and nuances of a Reverse Mortgage can vary, and understanding these details is vital. With our experienced team at your side, you can confidently navigate the intricacies of this financial option.

Your peace of mind and financial security are paramount. If you’re considering using a Reverse Mortgage for gifting or any other purpose, make the wise choice: consult first. Check your eligibility with Seniors First and ensure you’re on the right track.


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