Bank of Mum and Dad under pressure. Time to revisit strategy for existing to future clients

The Bank of Mum and Dad (BOMD) has been getting plenty of attention lately, with growing focus on the costs that can come with family support for borrowers.

Whether it's funds to assist with a deposit, or a guarantee on a parental property, a growing number of families are seeing the risks associated with this support materialise, creating stress on those family relationships.

Even with the best intentions, family financial support can create issues including:

• Unclear expectations: Was it a gift, a loan or an investment?
• Relationship breakdowns: Divorce or family disputes can complicate ownership and repayment.
• Financial pressure on parents: Helping one child may impact retirement plans or create inequality between siblings.
• Substantial restrictions on parents: Unable to downsize or move when they want, especially if the property valuation is lower than when a guarantee was put in place (even if parents have substantial equity).
• Future inheritance disputes: Other family members may question whether support was fair.
• Delayed independence: Borrowers may feel financially tied to parents for years.
• Legal uncertainty: Informal arrangements can become expensive to resolve if circumstances change.

It's a timely reminder that relying on family shouldn't be the only pathway into home ownership.

That's where Connective Skip creates another opportunity for brokers.

Many borrowers don't need help with servicing. They need help with the deposit. They're paying rent comfortably, earning a strong income and are ready to own, but haven't been able to save a traditional deposit. Others simply don't have parents in a position to help - or would prefer not to mix family and finances.

With Connective Skip, eligible clients can purchase with as little as a 2% deposit, no LMI, competitive interest rates - and fees that are lower than the cost of LMI. Better still, clients can often access up to 30% more purchasing power than a comparable 95% LVR loan with LMI, helping them buy the home they want, sooner.

For brokers, that means a simpler solution for clients and less risk for their family. Parents can make a smaller contribution towards a deposit, retaining the financial flexibility and resilience that they need to navigate their path to retirement. Sometimes, the best way to help a client is simply to show them there's another path.

Showing clients another path to home ownership

If you have clients struggling to save a deposit or relying heavily on family support, your Connective Lending Manager or Connective Skip BDM can help discuss alternative purchasing pathways.