Family fortunes

We all want to help our kids get ahead, but there are some things to consider before becoming the Bank of Mum and Dad.

- GENEVIEVE GANNON

We’ve all heard of the Big Four banks, but did you know that the fifth largest lender in Australia is the humble Bank of Mum and Dad?

More than a quarter of first home buyers in Australia made the leap to home ownership with help from their parents, according to recent research by Genworth, and it’s not just deposits being boosted by family wealth. Household Capital CEO Josh Funder says many grandparents help out with the cost of educating the younger generation.

“Most parents want to help out their kids, and grandparents want to help out their grandchildren. The two principal ways we’ve seen that happen in the past is helping kids with their first home buyers’ deposits, and grandchildren with education expenses,” Josh says.

But while the Bank of Mum and Dad is a longstanding and important lender, there are two important questions you should ask first. Josh walks us through them.