The $100k Gift: How Family Support Widens the Housing Divide
For many young Australians, the dream of owning a home feels impossible. This is especially true in Sydney, where prices keep going up. But a new divide is growing. It’s not about hard work, but about having a powerful lender: the bank of mum and dad.
Meet Sarah and Adam. They’re both 24 and just finished law school. They each got a great job paying $97,000 a year. They have the same degree and the same drive. But their financial paths are now very different.
Adam is on his own. He’s saving every dollar he can for a deposit while paying high rent. It’s a slow and difficult process. Even with a good salary, saving enough for a 20% deposit and other fees is a huge challenge.
Sarah’s story is different. Her parents, who bought their own home when it was much cheaper, gave her a life-changing gift: $100,000 for her deposit. This simple gift gives her a massive head start.
The Big Difference a $100k Gift Makes
Here’s why a $100,000 gift is so helpful:
- Faster Deposit: Adam will take years to save $100,000. Sarah has it now. This is the power of the bank of mum and dad.
- Smaller Mortgage: With a bigger deposit, Sarah borrows less. This means her monthly loan payments will be lower.
- No Lenders Mortgage Insurance (LMI): By having a large deposit (over 20%), Sarah can avoid paying LMI. This is a big cost that Adam will likely have to pay.
This gift has a huge effect. Sarah can buy a home soon, while Adam must keep waiting. The longer he waits, the more expensive homes become.
This is a real trend. The bank of mum and dad is now one of Australia’s biggest lenders. This reliance on family money raises questions about fairness. It suggests that success isn’t just about a good job, but about financial inheritance. The Australian dream of owning a home is becoming a privilege, not a reward for hard work.
More Information
Planning to buy a home? We can help you find a great home loan, with or without family help. Our brokers compare many options to get you the best deal.
For more tips on saving money on your home loan, check out our article on mortgage refinance australia. It explains how refinancing can save you much more than a rate cut. You can also read our article on the RBA rate cut to see which lenders moved first.
