i can't see a problem with what you are doing - everyone is happy. just be aware of kristine's advice regarding stamp duty and, as no one has pointed out yet, be aware of the capital gains issue. if you ever sell in the future your base cost will be $100,000 lower than if you have paid market value - so you gain will be $100,000 greater. but by saving interest repayments on the extra $100k, and the investing opportunities it may open up for you in the future by having extra cash in pocket would probably outweigh this issue. just be aware of them so they don't bite you.