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Should I give my son $100,000 for a deposit?

ask paul clitheroe house deposit son guarantor gift cash home

Q: I’m thinking of giving my son $100,000 to assist with his home loan.

Can I do this as a gift? If not, can I go guarantor for his home loan? How long am I tied in as guarantor?

Paul: Hi, Peter, that is a good thing to be able to do for your son, but there are as many risks here as wandering around a minefield.

The guarantor role terrifies me: your obligations would be for as long as the loan existed and I would not recommend this route without seeing a solicitor.

The gift also worries me. If your son has a financial issue or even a relationship break-up, the gift is at risk.

So my preferred option is a documented loan to your son. In time to come you may choose to turn this into a gift but a loan arrangement protects your son and the $100,000 from unexpected life events.

Again, chat to a solicitor about this.

Written by Paul Clitheroe

Paul Clitheroe

Paul Clitheroe AM is a respected financial adviser and Money’s chairman and chief commentator. He is chair of the Australian Government Financial Literacy Board, and author of several personal finance books. Ask Paul your money question.

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