first IP query fr friend

[MFG]

Hi,

i have a question from a friend

she has a PPOR fully paid but it's in her sister and her name.

now she wants to buy a new IP on her name only.

If she draws a LOC from her PPOR to finance her home, will the LOC be under 1 name or 2 names? If the LOC account is in 2 names, can she still use the LOC to finance the 20% of her IP?

cheers,
Scott

 

[Perth Investor]

Two options:
Option 1. The LOC would be in two names
Option 2. The LOC would be in one name, and her sister would go "guarantor".

Generally in this instance a guarantor would probably be the go, because she has no use for the money, there's no real point her being on the loan. But the differences are semantic really: In both instances you don't pay the loan, the bank sells the house...

There wouldn't be a problem with using the LOC to finance the IP if it's in two names. Just remembering if it is in two names and there are funds available her sister could clean it out while she is sleeping, so that might be a good reason to have it in one name!

 

[MFG]

thanks for the information. cheers

Scott