Going Guarantor for a loan

[Jodie701]

Our accountant suggested to us that we purchase properties in hubby's name only for tax purposes (I'm at home with the little kids, no income). Fair enough. But since our home is in both names and we need to borrow against the home equity to use as a deposit for the investment property, I need to guarantor to that loan.
The tricky bit is that I need a solicitor and an accountant to sign the guarantor forms with me before the loan will be approved.
It turns out that only about 2 Solicitors in WA will sign guarantor papers. So I finally got that bit signed after a couple of weeks searching. I wonder why most don't do it?
And now the very accountant that recommend we go down this path wont sign the other piece of paper!??

 

[Spectre]

Probably the questions then are

Who is the lender causing such grief

Why do you have to go guarantor - ask your accountant if its ok if you both go on the loan but put the ownership of the asset in your hubby's name - then they prorata the interest

or draw up on equity with your existing property for deposit on the IP. Then the loan and the IP are in your hubbys name and you're not even involved.

Sounds like you really need to either find a new accountant and/or mb / financier

 

[Peter_Tersteeg]

This sounds a bit strange. Aren't the guarantor papers essentially asking them to sign that you (the guarantor) has had appropriate legal and financial advice? This is common with personal guarantees and given some peoples experience providing guarantees, it's quite reasonable for the lender to require this.

I can't say that I've ever had problems getting someone to sign this sort of paperwork. The biggest hassle is the people to get to the accountant/lawyer during business hours (and the fact that they usually have to pay for the time).

 

[wylie]

I have had to go through this several times for the same reasons. I didn't have any problems doing so, except that it was generally needing to be done "yesterday" in order to get the paperwork done in time.

Also, the solicitor made sure that I knew exactly what I was getting in for, and subsequently the appointment took way longer than I needed, but I understand he was covering himself.

 

[LynnH]

Our accountant suggested to us that we purchase properties in hubby's name only for tax purposes. ..... But since our home is in both names and we need to borrow against the home equity to use as a deposit for the investment property, I need to guarantor to that loan.

Hi Jodie

This bit doesn't make sense .....

We have gone down this path several times. IPs are purchased in hubby's name (with IP loans in hubby's name), LOCs secured against our PPOR are used for deposit and costs - PPOR is in joint names and LOCs are in joint names, with interest on LOCs being fully deductible on hubby's TRs (since the funds are used for the purpose of investing in his name). I have never had to go guarantor for any of the loans. (Note: the loans are NOT x-colled).

If a property is in joint names and is used as security for a loan, then the names of both owners must go on the loan documentation - and both owners are jointly and severally responsible for the payment of the debt. So why does the Bank require you to go guarantor when you are already legally responsible for the debt anyway???

Edit: It also does not make sense that the Bank require you to go guarantor when you have said that you do not have the income to service the loan.

Cheers
Lynn

 

[Rolf Latham]

Hiya

Loan in both names, security in one name, or easier 99/1.

Usually simple, but many try to overcomplicate the simple

ta
rolf

 

[LynnH]

..... if you both go on the loan but put the ownership of the asset in your hubby's name - then they prorata the interest

Further to my above post ...

BTW, it is not necessary to pro-rata the interest. The ATO considers that in such circumstances, the wife on-lends the money to the husband at the same rate of interest that the Bank charges, and therefore the husband can claim the full amount of interest as a deduction on his TR (in effect, hubby claims his half of the interest plus the interest on the wife's half of the loan that she is 'lending' to him).

Cheers
Lynn

 

[Jodie701]

Thanks for comments, I'll show this thread to hubby.

The bank is ING. Our mortgage Broker has said that most other banks don't require this. ING has stuffed us around so much getting this loan, but we choose to go with them simply because our home mortgage is with them and we've been very happy customers up till now.