The Broker Times Strategy Series
How modern brokers structure intergenerational wealth without risking the Bank of Mum & Dad's retirement.
Median Metro Price
Avg. Deposit Gap
Funded by Family
The "Old Way"
Liquidity Loss: Cash leaves the parents' offset account immediately.
Divorce Risk: Gift forms part of the child's relationship asset pool.
Zero Control: Once gifted, parents have no say in how funds are used.
The "Smart Way"
Preserves Cash: Money stays in parents' offset, saving them interest.
Asset Protection: Equity is security, not an asset to be split in divorce.
Defined Exit: Guarantee can be released once LVR improves.
What happens when structure is ignored?
Equity "locked" in guarantees can prevent parents from downsizing or funding aged care.
50% of an unprotected cash gift can walk out the door with an ex-partner.
"All Monies" clauses can make parents liable for credit cards and car loans too.
Not all guarantees are created equal.
| Type | Risk Level | Broker Verdict |
|---|---|---|
| Limited Guarantee | LOW | ✅ Liability capped at specific amount. |
| Servicing Guarantee | MEDIUM | ⚠️ Guarantees repayments, not just security. |
| All Monies | CRITICAL | ⛔ Liability extends to ALL debts. Avoid. |
Formalize the Loan: Always recommend a solicitor drafts a formal loan agreement, not just a gift letter.
Filter Products: actively select lenders offering "Limited Guarantees".
Plan the Exit: Set a timeline (e.g., 3-5 years) for the child to refinance and release the parents.