Helping family with home equity without risking your own retirement

Using equity to help children or grandchildren is safest when you first ring‑fence what you need for your own retirement, keep 6–12 months of expenses in cash or offset, and then cap family help within that surplus. From there, you can choose between cash gifts, loans, or guarantees, run the numbers at interest rates 3% higher, and put everything in writing so your home and relationships stay secure.

In other words: protect your roof and income first, then help.

Start by defining how much equity you can safely use without affecting your own retirement.

1. Start with a clear “safe to help” number

Before talking about structures, you need a dollar figure you can safely put towards helping family.

1.1 Map your retirement baseline

List three numbers:

1. Essential living costs in retirement – food, utilities, insurances, basic travel.
2. Housing costs – current or future rates, maintenance, strata, insurances.
3. Loan commitments – any home, investment or personal loans.

A practical rule from our equity work is to keep at least 3–6 months of combined living expenses and repayments in cash or true offset, and 6–12 months if you’re within 10 years of retirement (see /insights/helping-adult-children-buy-using-mascot-equity-without-risking-future).

1.2 Define your equity buffer

Most lenders are most comfortable if retirees stay at or below 50–60% Loan to Value Ratio (LVR) on the family home. That usually leaves room to help family without turning your home into a highly geared investment.

A simple framework:

• Work out your current LVR (total loans ÷ property value).
• Decide a personal ceiling – many later‑life clients choose no more than 60% LVR.
• The difference between today’s LVR and your ceiling is your maximum gross borrowing capacity.
• Then reduce that for comfort: often only 50–70% of that gap is used for family help.

If that feels abstract, run an example.

1.3 Worked example: How much is really safe?

• Home value: $1,800,000
• Current loan: $300,000 (LVR = 16.7%)
• Personal LVR ceiling: 55%
• 55% of $1,800,000 = $990,000
• Theoretical extra borrowing room: $990,000 – $300,000 = $690,000

Instead of using the full $690,000, a conservative approach might be:

• Use 50% of that capacity for all future equity needs (renovations, aged care, emergencies, family help).
• That’s $345,000 total – and you might cap family support to $200,000–$250,000 of that.

This way, you still have debt well below 55% LVR and leave unused capacity for your own needs later.