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42 minute read
Using Family Money for Your Next Home or Investment Property? Don’t Skip These 5 Steps.
How to document it properly and protect everyone involved.
Nurain Nadzirah
12 August 2026
A recent Court of Appeal ruling confirmed something a lot of Kiwi families don't think about until it's too late:
Money from parents is legally assumed to be a gift, not a loan, unless there's clear evidence proving otherwise from the start (read our jargon-free breakdown of the case here).
If family money is part of how you're funding your next home or an investment property, here's how to make sure everyone's protected, and nobody's left guessing later.
1. Decide properly, whether it's a gift or a loan
This sounds obvious, but it's the step most families skip.
A quick chat over dinner isn't evidence. If the money is meant to be repaid, or your parents want an ongoing interest in the property, that needs to be a clear, documented decision.
✅ DO THIS
Have the actual conversation, out loud, with everyone involved. Agree on what it is before the money moves, not after.
2. Put it in writing, even if it feels awkward
If it's a loan, get a simple loan agreement drawn up: amount, repayment terms (if any), interest (if any), and what happens if plans change, for example, if the property is sold or refinanced.
If it's a gift, a short gifting letter can still be useful, particularly if a bank needs to see where your deposit came from.
✅ DO THIS
Ask a lawyer for a basic deed or loan agreement template. It doesn't need to be complicated, but it does need to exist.
3. Think about what happens to the property, not just the money
If parents are contributing toward an investment property or your next home, think about what happens down the track: if the property is sold, if you separate from a partner, or if your parents later need the money back for their own retirement.
✅ DO THIS
Talk through a few "what if" scenarios with your family and our adviser before you commit.
4. Keep a paper trail
Bank transfers with a clear reference, dated agreements, and any related correspondence all help establish intent if it's ever questioned later, whether that's by a bank, a lawyer, or in the worst case, a court.
✅ DO THIS
Avoid cash. Use a bank transfer with a clear description and keep a copy of any agreement somewhere both parties can access.
5. Loop in your mortgage adviser early, not after the offer's in
Lenders look at gifted or family-sourced deposits differently, and how the money is structured can affect your loan options, your equity position, and how your finances are assessed.
This matters even more if you already own property and are structuring your next purchase around existing lending.
✅ DO THIS
Have this conversation with our adviser before you start looking, not once you've found the place.
Using family money for your next move?
Talk to us before the money moves. We'll walk you through what to put in writing so everyone's covered.
This article is for informational purposes only. It does not consider your personal financial situation or objectives. Please consult with Tella mortgage and financial experts before making any decisions regarding your mortgage or debt strategy.