Australians are always ready to help each other in times of need and are renowned for wanting to help their children get ahead. One way an immediate family member can assist a child, or a sibling is to give them money as a gift. The reason we refer to it as a gift is that it differs considerably from a loan, as a gift does not have to be repaid, whilst a loan does. When considering a loan application, a lender will treat a family loan the same as any other loan, therefore it is counted within the loan application and allowances are made for repayments and interest irrespective of your specific arrangements.
A gift, on the other hand, is not considered something that needs to be paid back therefore it is looked at favourably when it comes to a loan application.
Ideally, where a family member is happy to provide a gift, it can either be provided as one lump sum amount prior to the purchase of the property. Alternatively, it can be provided in parts whilst you are saving for your loan. There are advantages to having the money gifted over time in smaller bundles as opposed to one large amount, which can reflect positively on the loan application.
TIP Where a gift is received 2 years prior to a loan application, it does not need to be defined as a gift. In fact, any money gifted 90 days prior to a loan application is not considered a gift when it comes to a loan application.
When it comes to financial gifts from a Family Member, it is worth remembering that works to your advantage to receive the gifted money at least 90 days prior to you lodging a loan application Multiple payments whilst you saving for your deposit are also another approach that will ultimately assist your application. Either way, gifting is perfectly accepted by Lenders and ultimately does not hinder your loan application.
