A Cautionary Tale: The Risks of the Bank of Mum and Dad for Property Purchases

September 19, 2025 - 04:14

The traditional savings scheme known as the "Bank of Mum and Dad" has been a common practice for generations, particularly among families looking to assist their children in purchasing property. Recently, a trend has emerged where many Asian boomers are leveraging this financial support system to navigate the increasingly competitive real estate market. While this approach can provide significant advantages, it also comes with considerable risks that families should be aware of.

Parents often tap into their savings or home equity to provide substantial down payments, which can help their children secure homes in a challenging market. However, this financial strategy can strain family relationships and create long-term financial burdens for both parties. Experts warn that parents should carefully consider their own financial stability before committing funds, as unexpected circumstances can arise, impacting their ability to support their children in the future.

As the property market continues to evolve, families must weigh the benefits against the potential pitfalls of this age-old practice. Open communication and clear agreements are essential to ensure that both parents and children understand the implications of such financial arrangements.