Creative Financing.

[beech]

Answers Please.


Buying parents home and have just about run out of serviceability and was considering my options.

They will move into one of my new units for life after the settlement.
Had an idea during the week which they are fine with as they understand what im doing (Property inv)where so i qualify for serviceability to purchase their home through a trust.
I would purchase their home for $250k.
Though i only have 50k deposit a 100k deposit would see me over the line and qualify for the loan.
So they would be therefore gifting 50k on the loan to be paid back in seperate arrangement.(even though they dont want it back.Work that one out.Maybe because im an only child?)
Now i was wondering if this can be done?Does the bank need to actually see $100k in an account?

Am i deceiving the bank by doing this?
Not interested in LO DOC as hopefully on the strength of your repys wont need to.


Also how will this effect their pension,with $200k in their pocket?
As they will live in one of my units will they need to maybe buy cheap property themselves and rent out to still qualify for pension?


Had more questions but that lot should keep you busy.

Thanks Guys


Darren

 

[Macca]

Hi Beech,

Your parents or you could ask Centrelink about the treatment of that money. If they don't own their residence they are allowed to have more cash and still get the pension.

It will also depend on how many other assets they have.

I would ask a mortgage broker about the deal on the deposit.

Macca

 

[Mr. Fabulous]

Darren,
The Assets Test for Non-Homeowners (this would apply to your parents, as they would no longer be homeowners) is: For Full Pension/Allowance, Single: up to $242,000, Partnered: up to $301,500. These figures were for the period between 20th Sep. and 31st Dec. 2001 though. I assume the figures may be higher now. But it looks like they may be in the clear as far as their pension goes. Besides, the home and super balances are not counted among assets for these purposes anyway.

BUT: do not take my word as gospel. This is info. I garnered from another source, and it may not be correct at this point in time. I would still go see Centrelink if I was you (which I'm sure you'll do anyway).

Mark
'no hat, some cattle'

 

[Kevmeister]

Why not just buy the house from them for $200K and have a separate agreement (unrelated to the property) for $50K?

Bank will then see valuation > purchase price etc.

In fact, why not buy the house from them for a really really low price to save on stamp duty (hmmm, is this legal?) (but you might need to find a lender who will let you borrow to valuation, not to contract price).

 

[Rolf Latham]

Hi Beech

I would be looking at easier ways to start with.

Dont assume youre out of service until you are out of service. I assume you have tried all avenues.

Lenders will take val over contract value if it can be shown that there is a favourable purchase. Mortgage insureres will too, BUT are a little more difficult to convince.

Ta

rolf

 

[beech]

thanx for the replys guys.

Rolf any hints re the easier ways?

As Kev says buy the house lower 150k,lower the stamp duty,seperate arrangement for the other.

Would this all be above board Rolf?
Any problems setting this up for stamp duty savings?


thank you, Darren

 

[Rolf Latham]

Hi Beech

Val over contract is the easier way :O)

On the stamp duty side, you may get picked up if the value is way out of proportion. Many stamp duty legislation thingies have a clause of sales price or market value.

ta
rolf

 

[Kevmeister]

I can't imagine that the people at the Land Titles Office (or whomever the Stamp Duty is paid to) would really suspect a property being bought for $150K instead of $250K. But, this is nothing but a supposition.

Most [metropolitan] suburbs will easily have huge variations in price > $100K from one property to the next?

On the other hand, if you buy the property for $10K, *that* might start to attract suspicion...

 

[beech]

Who would actually be the ones to pick it up?

If it was picked up it could be argued that i got it cheaper because i personally paid for extension and other repairs and renos,which i did.


Would this matter at all.And if i said their was an agreement to purchase for cheaper at later date because of this?

Also Rolf all banks do the Val over contract?

thanx Darren

 

[Rolf Latham]

Hi Beech

Standard lenders policy most times is val or contract whichever is the lower. You need to be able to clearly show "favourable purchase"

Ta

rolf

 

[jeane]

Hi Rolf,

A couple of questions; what defines a "favourable purchase" in the eyes of the bank and how does one going about making a strong case for it to be considered?

Many thanks

Jasmine