Advice required on structure of property ownership/loan

Hi All,

Due to a growing family my wife and I are planning to sell our existing house and pool our funds together with my mother-in-law to upgrade to a new PPOR for us all to live together in.

Once moved in my wife and I are keen to look at purchasing our first IP (separate from mother-in-law) using equity from the new property. Before doing so however I would like to consider the structure of the ownership, e.g. names on title, loan, etc., and make sure I understand the implications of the different options.

Currently I am working full time and earning the highest wage. My wife is working part time from home and is unlikely to go back to work full time any time soon. My mother-in-law works full time but is planning to retire within the next year or so.

Can anybody suggest a suitable structure in terms of a) names on the title, b) names on the loan, c) joint tenants or tenants in common, d) if TIC then equal or unequal shares, which would give my wife and I the best borrowing capacity for an IP in the near future while at the same time protecting or keeping separate the mother-in-laws share of the property?

I?m fairly new to all of this so looking forward to hearing your thoughts.

Thanks,

Jonathan
 
If MIL may access a Centrelink benefit have you considered the Granny Flat concession exemption ??

A right to a GF is treated differently and may assist her to access benefits.
 
From a lending perspective, when you purchase an investment property, lenders will assume you're responsible for the entire existing PPOR mortgage. This includes your mother in law's share.
 
Depends on a whole heap of stuff not mentioned.

See my first 3 newsletters where I write about structures.

Thanks for the info Terry. Certainly a lot to think about as you say!

If MIL may access a Centrelink benefit have you considered the Granny Flat concession exemption ??

A right to a GF is treated differently and may assist her to access benefits

I was not aware of this but I will definitely keep it in mind. Cheers!

From a lending perspective, when you purchase an investment property, lenders will assume you're responsible for the entire existing PPOR mortgage. This includes your mother in law's share.

Ok that's good to know.
So would the lenders only consider the entire mortgage when looking at the serviceability of the new loan?

If we all went in as joint tenants, i.e. 33% each, and I was to apply for an equity loan under my name only for a deposit on an IP, would the banks only lend me approx 80% of the 33% of the total equity?
 
If we all went in as joint tenants, i.e. 33% each, and I was to apply for an equity loan under my name only for a deposit on an IP, would the banks only lend me approx 80% of the 33% of the total equity?

No, a bank would not lend you on your share of the property. All owners would need to go on the loan. If you want a loan in your name only the other 2 would be required to give guarantees.

And JT is not usually a good idea. What if you and spouse died together - would you want MIL getting the whole property? What about your children or other relatives?
 
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