For millennials looking to purchase a home, the biggest hurdle is coming up with a down payment. Most mortgage lenders require a 20% down payment, which typically translates into thousands of dollars that you would have to pay before actually obtaining mortgage financing. Many young homebuyers resort to asking friends or family members for help with the down payment amount. For example, some parents may pay the entire amount on behalf of their kids, while others may lend this money to them as a loan.

How you receive your down payment will directly impact the conveyancing process. For example, if you receive it as a loan, you may need to inform your mortgage lender of the repayment terms before taking out the mortgage. The amount you receive may also change property tax and title requirements with your conveyancer.

To help you remain on top of things, here's what you should consider when receiving help with your down payment.

1. How is the money being issued?

When receiving help with your down payment, you may obtain the money in many different ways:

• As a gift
• As a loan to be repaid
• As a partial investment in your home

Each option will have different implications for your mortgage and conveyancing process. If you receive the money as a gift, you may need to communicate your new income limits to your mortgage lender. This information may change the type of mortgage you can qualify for and how long it will take to repay.

In the case of loans or partial investments, the title of your property may also need some tweaking. You may need to include your family member as a part-owner of your home if they give you the down payment as an investment in your property.

2. Inform your conveyancer

Before purchasing any property, you should always hire a conveyancing solicitor to help you finalise the transaction. Conveyancers understand the legal implications of having a friend/family member helping you with down payment amount. They can also help you process all relevant paperwork (especially the title) to avoid ownership disputes down the line. 

3. Have backup plan handy

The down payment amount is a significant part of your mortgage and path to homeownership. Therefore, it's crucial to have a backup plan in case your friend/family member changes their mind midway through the process.

A backup plan may be in the form of emergency cash reserves, having another family member who may be willing to help, or even a property insurance policy.