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Ask Paul: Should I give my son $100,000 for his mortgage

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Q. I would like to give 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? - Peter

A.: Hi, Peter, that is a good thing to be able to do for your son, but there are as many risks involved in this situation as wandering around a minefield.

ask paul clitheroe house deposit son guarantor gift cash home give

The possibility of you going guarantor frankly terrifies me: your obligations would be for as long as the home loan existed and I would not recommend you pursue this route without first speaking to a solicitor.

The gift also worries me.

If your son has a financial issue or even a relationship break-up, the generous gift of your money is at risk.

So my preferred option here is a documented loan to your son. In time to come you may choose to turn this into a gift for your son that need not be repaid, but a loan arrangement protects your son and the $100,000 from unexpected life events that may arise down the track.

Again, you should chat to a solicitor about this to be on the safe side.

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Paul Clitheroe AM is the founder of Money and serves as the publication's editorial adviser. One of Australia's most trusted personal finance experts, Paul has spent decades helping Australians build wealth, manage debt and make smarter money decisions. He is widely known for host­ing the Money TV program and authoring best-selling personal finance books. Since launching Money in 1999, he has played a leading role in delivering practical, independent financial guidance to Australians. Paul is chair of InvestSMART Financial Services. He was the founding chair of Ecstra Foundation, a national not-for-profit focused on improving financial wellbeing, from 2018 to 2026, and led the Australian Government's Financial Literacy Board and Financial Literacy Australia from 2004 to 2019. In academia, Paul is chair in financial literacy at Macquarie University, where he is also a Professor in the School of Business and Economics. Ask Paul your money question. Due to volume, Paul cannot respond to questions posted in the comments section.