Helping Your Kids Into Their First Home: Pitfalls to Avoid and Smart Ways to Help
With house prices still high across much of New Zealand many parents are stepping in to help their children buy their first home. Whether it’s gifting money for a deposit, acting as a guarantor, or even co-owning a property, parental support can make a huge difference. But it also comes with potential risks for you and for your child.
Here’s what to consider when helping your kids into a home, and how to avoid common pitfalls along the way.
Understand the Financial Risks
Helping with a home purchase can feel like a generous and supportive move but it’s important to be clear about what you’re committing to. If you’re gifting money it’s worth getting legal advice and putting it in writing. A deed of gift can help clarify that the money isn’t a loan and won’t be repaid.
If you’re acting as a guarantor or co-borrower, you’re taking on a legal responsibility for the loan. If your child defaults the bank can come to you for repayments. This can impact your ability to borrow in the future and put your own financial wellbeing at risk.
Set Clear Expectations
Whether you're gifting money or sharing ownership, talk openly about expectations. Will your child be solely responsible for repayments? Are you expecting to be paid back in future? If they’re buying with a partner, what happens if the relationship ends? These questions are easier to deal with upfront.
Having a written agreement protects everyone involved, especially when family dynamics shift over time.
Think About Future Proofing
If your child is buying with a partner, consider how your financial help would be protected in the event of a separation. Without a legal agreement, your gifted deposit could be split between both parties. Many families use a relationship property agreement to set clear terms around ownership and contributions.
You should also consider the long-term impact on your own finances. Can you still retire comfortably if you gift a large sum? Will it affect your eligibility for government support later?
Consider Gradual Support
Not all help needs to happen upfront. You could offer smaller financial assistance over time, such as helping with mortgage repayments, home maintenance, or legal fees. Some parents also contribute indirectly by letting their child live at home while they save for a deposit.
Ideal Approaches That Balance Support and Security
Gift a portion of the deposit with a deed of gift
Act as a secondary co-purchaser with your name on the title (alongside a legal agreement)
Loan money with formal terms and repayment conditions
Help build credit by co-signing smaller loans first, to avoid large financial exposure
There’s no one right way to help but there are strong ways to protect both your child and yourself.
Talk to the Professionals
Helping a child into a home is both a financial and emotional decision. Talking to a mortgage adviser, financial planner, or solicitor can help you choose the best approach and ensure you understand all the legal and tax implications.
With careful planning and clear communication you can help set your child up for a strong start — without putting your own financial future at risk.