Exemption from LMI, and exiting joint ownership

I'm considering purchasing an investment property (90% loan) in conjunction with my brother who is a Doctor therefore qualifies for exemption of mortgage insurance with anz, under there lending criteria. An additional advantage is that this would improve my borrowing power.
Problem according to my mortgage broker is that this would effectively reduce my subsequent borrowing capacity as I would be assessed as liable for 100% of the debt but only 50,% of the rental income, regardless of ownership split.

To escape this, I'd like to transition to full ownership down the track.
I'm told by my broker that this is complex and he is not sure of what the overall tax implications are - ie returns and capital gains tax.

The objective is to have my brother on title in order to avoid mortgage insurance and harness his borrowing capacity, without invoking complicated and costly consequences down the track.
Any advise on best way to proceed would be greatly appreciated!
 
A few quick thoughts:

* If you purchase your brothers half of the property you'll have to pay stamp duty on that half.

* Removing a name from the title likely means a new loan needs to be set up. If that loan is above 80% LVR, you'll need to pay full LMI at that point in time.

* Some Capital Gains Tax is likely payable.

Buying property jointly with extended family members does have a tendancy to be a bit of pain in the future but there is some light at the tunnel.

* Whilst many lenders assess you as getting only half the income in the future, some will acknowledge that you're responsible for all the debt and would also get all the income.

* The loan can be structured with some lenders that you're only responsible for half the debt and get half the income.
 
I'm considering purchasing an investment property (90% loan) in conjunction with my brother who is a Doctor therefore qualifies for exemption of mortgage insurance with anz, under there lending criteria. An additional advantage is that this would improve my borrowing power.
Problem according to my mortgage broker is that this would effectively reduce my subsequent borrowing capacity as I would be assessed as liable for 100% of the debt but only 50,% of the rental income, regardless of ownership split.

To escape this, I'd like to transition to full ownership down the track.
I'm told by my broker that this is complex and he is not sure of what the overall tax implications are - ie returns and capital gains tax.

The objective is to have my brother on title in order to avoid mortgage insurance and harness his borrowing capacity, without invoking complicated and costly consequences down the track.
Any advise on best way to proceed would be greatly appreciated!

Why would you have the loan with ANZ when Westpac and CBA are much better in this space and trump ANZ in a lot of areas?

Your broker is correct re the servicing but the exception is St George and AMP where they do a "common debt reducer" which means they will take half of the debt provided the other party can still service their debt.

Have you considered doing a BFA? Im not a solicitor but it may be worthwhile discussing your options with a solicitor.
 
I'm considering purchasing an investment property (90% loan) in conjunction with my brother who is a Doctor therefore qualifies for exemption of mortgage insurance with anz, under there lending criteria. An additional advantage is that this would improve my borrowing power.
Problem according to my mortgage broker is that this would effectively reduce my subsequent borrowing capacity as I would be assessed as liable for 100% of the debt but only 50,% of the rental income, regardless of ownership split.

To escape this, I'd like to transition to full ownership down the track.
I'm told by my broker that this is complex and he is not sure of what the overall tax implications are - ie returns and capital gains tax.

The objective is to have my brother on title in order to avoid mortgage insurance and harness his borrowing capacity, without invoking complicated and costly consequences down the track.
Any advise on best way to proceed would be greatly appreciated!


We see this all the time..esp in Sydney with an average price of $800...very hard to bring together 15-20% deposit.

Just off the top of my head...

1. maybe Consider a trust structure to avoid Stamp duty transfer and Capital gain tax?

OR
If under personal name

5% and 95% ownership etc...


2. once the property goes up to by 10% ( to 80% LVR) refinance out and re structure back to single name


3. Most banks will take 100% liabilities ...but NOT all....some will take the " split" ie St George and AMP.


End of the day, you really want to sit down with an accountant and make sure you understand the CGT and the trust VS personal buy structure.
 
Why would you have the loan with ANZ when Westpac and CBA are much better in this space and trump ANZ in a lot of areas?

I quite like ANZ for medico deals - usually easy to deal with. Cba have caused me grief in the past with some of their quirks - wbc can be good.
 
save a few thousand for a potential lifetime of pandadol need..........

is it really worth the saving and or extra borrowing ?

Joint and several liability will chase you until you pay the stamps and potential CGT to exit the idea.

while some rare lenders dont use the Joint and several model most do

ta

rolf
 
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