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

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.

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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