u/Sahleee

Hey all, Looking for some thoughts on a situation we’re considering. My mum (70) owns her unit outright, worth around $650k. She’s on the pension but really struggling to live comfortably and it’s causing her a fair bit of stress. She’s tried a Centrelink reverse mortgage but it doesn’t give her enough to live on. My wife and I are both 40, earning about $440k combined (before tax).

We recently refinanced our PPOR and have about $180k sitting in our offset. We want to buy an investment property (~$1.35m), rent it out for now, and then move into it when our kid hits high school.

The issue is we don’t quite have enough equity for the full deposit + costs without chewing through our cash.

The idea we’re exploring is:

Pay out mum’s Centrelink loan Use her property as security/guarantee to cover the deposit + costs

Borrow the full amount for the investment property (to maximise negative gearing and keep our cash in offset)

In return, we’d effectively act as a “reverse mortgage” for mum by giving her $300/week (interest-free)

The understanding would be that:

All money we give her is tracked When the unit is eventually sold (or she passes), we get repaid:

total money advanced, OR

that amount plus a share of the capital growth (TBD structure)

I’ve got siblings, but I’m the only one in a position to help her financially or access lending like this.

Mum is keen because her alternative is going down the commercial reverse mortgage path, which feels like we both lose (higher interest, fees, and we still cop LMI/higher rates on our side). So I’m trying to sanity check this: Is this a clever way to help her + set ourselves up? Or are there traps I’m not seeing that could come back to bite us?

Cash flow won't be an issue, I'm more concerned about her pension being affected etc. Keen to hear from anyone who’s done something similar or understands the risks.