Parental Help

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New Build / Construction Loans

Craig Pope Financial is a KiwiSaver mortgage company servicing Kapiti Coast & Wellington

We’d love to chat with you to figure out how we can help, so please use the Contact option on this website to book a personalised consultation.

These days most first home buyers have some sort of parental help.

The most common is a gift of cash from parents.

The banks due usually require a declaration that reads something like this:

NAME (of person gifting):
Relationship to person receiving the gift?:
ADDRESS (of person gifting):
To Whom it may concern
I/We (name) gift (names) the sum of $…….. to help purchase a home. The gift is non repayable, non-interest bearing and no encumbrance will be added to the title of the property.
We will seek or waive legal & accounting advice pertaining to our gift.
The gift will be paid in cash prior to settlement, if not already paid.

Acknowledgement of Debt

A second common document is an Acknowledgement of Debt. It’s like a loan but has no repayments. The banks prefer wording like this on the declaration:

Name & Address (lender/parent):
Acknowledgement of Debt

To Whom It May Concern,

I/We … (Lender) hereby acknowledge that we will lend NZD$…. or equity of the same amount to ……(Borrower) towards a property(s) purchase.
The date of the transaction being on or about…… (Settlement Date).
The debt is non-interest bearing and does not require payments. The debt is to be repaid on the sale of the property being purchased or earlier by full 1st mortgage refinance or mutual consent with bank permission. There will be no encumbrance placed on the title.
Signed by the Lender(s)…………………………………… 
Signed by the Borrower(s):………………………………… 


We also recommend all parties seek legal advice.

Additionally, it is still possible for you to borrow 100% of the purchase price of your house if you have family, generally parents, available to guarantee a portion of your loan, which is normally 20%.
This means that effectively the home is 100% purchased and you need to show you can service the entire loan. The long-term plan is to release the guarantee from the other party as soon as you have say 10% or more equity built up in your new home.

While it is a viable option, the guarantor needs to understand their liability quite clearly and any guaranteed amount needs to be supported by way of a mortgage over the guarantors’ property. Again, contact your Craig Pope Financial adviser can go over this option in depth with you if required.