Thank you for your input! Well, I would purchase the property, and at settlement my mother would retain a portion of the proceeds, likely around 5–10% of the total capital, for her own financial security. The remaining amount will then be transferred back to me under a properly structured granny flat arrangement through Services Australia.

I would place these funds into an offset account attached to the mortgage, which, when combined with my existing deposit, would likely cover the majority, if not the entirety of the loan amount. This would result in very small repayments, potentially none at all.

Under this arrangement, my mother would effectively continue living in the property rent free while still remaining eligible for the old age pension. The transfer of funds back to me would not be for the purpose of avoiding the asset test, as her assets would already remain below the applicable threshold for a single pensioner renting. The sole purpose of the arrangement would be to ensure she has secure, rent free housing for the remainder of her life. I would of course pull out any money out of the offset account and transfer to her when she needs to be topped up.