{"id":3468,"date":"2026-08-25T22:24:53","date_gmt":"2026-08-25T12:24:53","guid":{"rendered":"https:\/\/chipkie.com\/au\/?p=3468"},"modified":"2026-08-25T22:24:57","modified_gmt":"2026-08-25T12:24:57","slug":"family-mortgage-loan","status":"publish","type":"post","link":"https:\/\/chipkie.com\/au\/blog\/2026\/08\/25\/family-mortgage-loan\/","title":{"rendered":"Family Mortgage Loan: What Lenders Accept 2026"},"content":{"rendered":"<p><em>By <strong>The Chipkie Team<\/strong>, Personal Finance Editorial Team &nbsp;\u00b7&nbsp; Last updated 25 August 2026<\/em><\/p>\n<p>Australian parents are now the country&#8217;s quiet mortgage market. Every year, billions of dollars move from one generation to the next to get a child into a house \u2014 usually as an informal handshake, occasionally as a properly structured <strong>family mortgage loan<\/strong> where the parents genuinely act as the mortgage lender instead of the bank. The difference between those two versions is enormous, and it only shows up when something goes wrong.<\/p>\n<p>Done properly, lending the whole purchase price yourself can beat the bank on rate, fees and flexibility. Done informally, it fails on three fronts at once: the parents end up with an unsecured, unprovable claim, the tax treatment gets messy, and if the money was really meant to sit behind a bank loan as a deposit, most lenders will refuse it as a source of funds outright.<\/p>\n<h2>Key Takeaways<\/h2>\n<ul>\n<li>Australia has no gift tax and no inheritance tax, so the tax question with family lending is about interest income and deductibility \u2014 not a transfer tax.<\/li>\n<li>A family loan only becomes a real mortgage when it is secured by an instrument registered over the title with your state or territory land titles office.<\/li>\n<li>If a bank is also lending, an undisclosed family loan used for the deposit is refused as a source of funds; disclosed, it is assessed as a liability and cuts borrowing capacity.<\/li>\n<li>Signing a gift letter or statutory declaration when repayment is actually expected is fraud, not paperwork.<\/li>\n<li>According to ASIC&#8217;s MoneySmart, Centrelink gifting limits are $10,000 per financial year and $30,000 over five financial years \u2014 relevant if you later forgive the loan and receive a means-tested payment.<\/li>\n<\/ul>\n<h2>What is a family mortgage loan, and how is it different from just handing over the cash?<\/h2>\n<p>A family mortgage loan is a written loan from a family member to buy or refinance a home, secured against that property by an instrument registered on the certificate of title. Handing over cash with no document creates an unsecured debt that a court, a bank or the Family Court may later treat as a gift.<\/p>\n<p>The distinction matters most in three scenarios our users hit repeatedly:<\/p>\n<ul>\n<li><strong>Relationship breakdown.<\/strong> Undocumented parental money is routinely argued to be a gift and folded into the property pool. A registered security interest and a repayment history are far harder to characterise as a present.<\/li>\n<li><strong>Death of the lending parent.<\/strong> An unrecorded loan becomes a fight between siblings. A documented debt is an asset of the estate, and your will can direct whether it is called in or forgiven.<\/li>\n<li><strong>Bankruptcy or default.<\/strong> An unsecured family creditor stands behind everyone else. A registered mortgagee has an enforceable claim on the house.<\/li>\n<\/ul>\n<p>Start with the terms, not the transfer. Our experience across the agreements users build is that the arguments are almost never about the rate \u2014 they are about what happens on sale, on early repayment, and on a missed month.<\/p>\n<h2>Can you actually secure the loan against the property, and how?<\/h2>\n<p>Yes. Australia has no US-style deed of trust; instead, security over land is created under each state&#8217;s Torrens system by registering a mortgage on title with the relevant land titles office. A caveat is a weaker alternative that warns off later dealings but does not give you the power of sale a registered mortgage does.<\/p>\n<p>Practical points most articles skip:<\/p>\n<ol>\n<li><strong>If you are the only lender,<\/strong> you can register a first mortgage. You will need a conveyancer or solicitor to prepare and lodge it, and a state-set registration fee applies \u2014 check the current fee with your land titles office.<\/li>\n<li><strong>If a bank is also on title,<\/strong> you can only take a second mortgage, and the first mortgagee&#8217;s written consent is normally required. Many banks simply refuse. A caveat lodged without consent can breach the bank&#8217;s mortgage terms.<\/li>\n<li><strong>Priority is everything.<\/strong> A second mortgagee is paid only after the bank recovers its full debt, interest and enforcement costs.<\/li>\n<li><strong>Licensing.<\/strong> A genuine one-off loan to family is not usually regulated credit, but if you lend repeatedly as a business you may fall within the <a href=\"https:\/\/www.asic.gov.au\" target=\"_blank\" rel=\"noopener\">National Consumer Credit Protection Act and ASIC&#8217;s licensing regime<\/a>. If you are lending through a private company rather than personally, <a href=\"https:\/\/chipkie.com\/au\/au\/blog\/2026\/06\/01\/division-7a-family-loan-agreement-requirements-australia\">Division 7A loan requirements<\/a> apply and cannot be ignored.<\/li>\n<\/ol>\n<h2>What if the money is for a deposit behind a bank loan instead?<\/h2>\n<p>This is the point where most family arrangements quietly break the rules. Australian lenders assess the <em>source<\/em> of every dollar of deposit, not just your capacity to repay. A repayable family loan used as deposit must be disclosed, and once disclosed it is assessed as a liability against your serviceability \u2014 and some lenders decline it outright.<\/p>\n<p>The realities to plan around:<\/p>\n<ul>\n<li><strong>Genuine savings.<\/strong> Many lenders want part of the deposit demonstrably saved or seasoned in your account for a period, particularly at higher loan-to-value ratios.<\/li>\n<li><strong>Gifted deposits.<\/strong> Where the money truly is a gift, the lender will require a gift letter or statutory declaration confirming the funds are non-repayable and that the donor retains no interest in the property.<\/li>\n<li><strong>The line you cannot cross.<\/strong> That declaration is false the moment repayment is actually expected, or a side agreement, IOU or verbal promise to repay exists. A false declaration can amount to obtaining a financial advantage by deception under the Criminal Code, and gives the bank grounds to call in the loan immediately.<\/li>\n<li><strong>Guarantees are the honest alternative.<\/strong> If you want to help without gifting, a security guarantee or a structure like the <a href=\"https:\/\/chipkie.com\/au\/au\/blog\/2026\/07\/06\/5-deposit-scheme-family-loan\">5% deposit scheme with family support<\/a> keeps everyone inside the rules.<\/li>\n<\/ul>\n<p>Put simply: parents acting as the mortgage lender for the <em>whole<\/em> purchase works cleanly. Parents lending a deposit that sits behind a bank loan while everyone tells the bank it was a gift does not, and never will.<\/p>\n<h2>How do you service an intrafamily home loan properly?<\/h2>\n<p>Treat it exactly as a bank would. Set a written rate and term, run scheduled electronic repayments with a clear reference, keep an amortisation schedule showing principal and interest split, and record the interest as assessable income. Documentation that only exists at the start is documentation that fails.<\/p>\n<table>\n<tr>\n<th>Feature<\/th>\n<th>Family mortgage<\/th>\n<th>Bank mortgage<\/th>\n<\/tr>\n<tr>\n<td>Application and valuation fees<\/td>\n<td>Usually nil<\/td>\n<td>Commonly charged<\/td>\n<\/tr>\n<tr>\n<td>Lenders mortgage insurance<\/td>\n<td>Not applicable<\/td>\n<td>Often required above 80% LVR<\/td>\n<\/tr>\n<tr>\n<td>Mortgage registration fee<\/td>\n<td>State-set fee applies<\/td>\n<td>State-set fee applies<\/td>\n<\/tr>\n<tr>\n<td>Legal or conveyancing costs<\/td>\n<td>Yes \u2014 both sides should advise<\/td>\n<td>Yes<\/td>\n<\/tr>\n<tr>\n<td>Interest rate<\/td>\n<td>Negotiated between the parties<\/td>\n<td>Set by the lender<\/td>\n<\/tr>\n<tr>\n<td>Hardship process<\/td>\n<td>Whatever you write down<\/td>\n<td>Statutory hardship rights, plus <a href=\"https:\/\/www.afca.org.au\" target=\"_blank\" rel=\"noopener\">AFCA<\/a> access<\/td>\n<\/tr>\n<\/table>\n<p><strong>Tax and Centrelink notes.<\/strong> Interest you receive is assessable income and must be declared to the <a href=\"https:\/\/www.ato.gov.au\" target=\"_blank\" rel=\"noopener\">Australian Taxation Office<\/a>. A borrower cannot deduct interest on their own home, but interest on a genuinely commercial loan for an investment property may be deductible \u2014 the ATO expects arm&#8217;s-length terms. On eventual sale, the ATO&#8217;s 50% CGT discount is available to individuals for assets held more than 12 months, apportioned by ownership share. And if you later forgive the debt while receiving the Age Pension, the forgiven amount is tested against the gifting limits above.<\/p>\n<p>For rate setting, our guide to a <a href=\"https:\/\/chipkie.com\/au\/au\/blog\/2026\/06\/16\/fair-interest-rate-family-loan-2026\">fair interest rate on a family loan in 2026<\/a> works through how to pick a defensible number without stinging either side.<\/p>\n<h2>What happens if a family mortgage borrower stops paying?<\/h2>\n<p>With a registered mortgage, you have real remedies: default notices, and ultimately a power of sale. With nothing in writing, you have a contested debt, a limitation period ticking away under your state&#8217;s Limitations Act, and a family argument. The security is what converts goodwill into a legal right.<\/p>\n<h3>Do we need a solicitor to set up a family mortgage?<\/h3>\n<p>For the loan terms alone, a well-drafted written agreement can be prepared without one. But registering a mortgage over title requires a conveyancer or solicitor to lodge the instrument, and independent legal advice for the borrower is strongly recommended so the arrangement cannot later be attacked as pressured.<\/p>\n<h3>Is a family mortgage loan taxed as a gift in Australia?<\/h3>\n<p>No. Australia has no gift tax and no inheritance tax, so transferring money itself triggers no transfer duty. What is taxable is the interest the lender earns, which must be declared as income. Forgiveness has no tax cost but may affect means-tested Centrelink payments.<\/p>\n<h3>Can we charge no interest at all?<\/h3>\n<p>Yes \u2014 Australia has no imputed-interest rule forcing a minimum rate on private loans between individuals. A zero-interest loan is legitimate. However, if the borrower wants to claim interest deductions on an investment property, or a company is involved, commercial terms become important.<\/p>\n<h3>Will a family mortgage stop our child getting a bank loan later?<\/h3>\n<p>It affects them. Any lender assessing a future application will treat the outstanding family debt as a liability and stress-test repayments against it. Documented, amortising loans with a clear end date are assessed far more favourably than open-ended arrangements with no repayment schedule.<\/p>\n<p>The gap between a generous intention and an enforceable one is a document. Before the money moves, get the rate, term, security and default terms written down \u2014 you can <a href=\"https:\/\/my.chipkie.com\/register?utm_source=blog&#038;utm_medium=article&#038;utm_campaign=content-engine\">create a written family mortgage agreement in minutes with Chipkie<\/a>, then take it to your conveyancer to register the security on title. It is the cheapest protection either side of this deal will ever buy. For more on the underlying paperwork, see our guide to building a <a href=\"https:\/\/chipkie.com\/au\/au\/blog\/2026\/07\/30\/family-loan-agreement\">family loan agreement that actually holds up<\/a>, and check current rules with <a href=\"https:\/\/moneysmart.gov.au\" target=\"_blank\" rel=\"noopener\">ASIC&#8217;s MoneySmart<\/a> before you commit.<\/p>\n<p><em><strong>Disclaimer:<\/strong> The information provided in this article is for general informational purposes only and does not constitute financial, legal, or tax advice. Australian laws and lending criteria vary by state and territory and may change. Always consult a licensed financial adviser, solicitor, or conveyancer before entering into any financial arrangement or property purchase with another party.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Understand how a family mortgage loan is documented, what lenders accept as a deposit source, and where informal handshakes fail. See what you need to know.<\/p>\n","protected":false},"author":3,"featured_media":3467,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_chipkie_hreflang":"[{\"hreflang\":\"en-AU\",\"href\":\"https:\\\/\\\/chipkie.com\\\/au\\\/?p=3468\"},{\"hreflang\":\"en-GB\",\"href\":\"https:\\\/\\\/chipkie.com\\\/uk\\\/?p=3687\"},{\"hreflang\":\"en-US\",\"href\":\"https:\\\/\\\/chipkie.com\\\/?p=3733\"},{\"hreflang\":\"x-default\",\"href\":\"https:\\\/\\\/chipkie.com\\\/au\\\/?p=3468\"}]","_yoast_wpseo_focuskw":"family mortgage loan","_yoast_wpseo_metadesc":"Understand how a family mortgage loan is documented, what lenders accept as a deposit source, and where informal handshakes fail. 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A repayable family loan used as deposit must be disclosed, and once disclosed it is assessed as a liability against your serviceability \u2014 and some lenders decline it outright.\"\n                    }\n                },\n                {\n                    \"@type\": \"Question\",\n                    \"name\": \"How do you service an intrafamily home loan properly?\",\n                    \"acceptedAnswer\": {\n                        \"@type\": \"Answer\",\n                        \"text\": \"Treat it exactly as a bank would. Set a written rate and term, run scheduled electronic repayments with a clear reference, keep an amortisation schedule showing principal and interest split, and record the interest as assessable income. 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