Help! Transferring property between relatives

[PackedLunch]

I would like to get some advice from those on this forum much savvier than I in the property game.

MY mum has offered myself and my brother the family home which she has now moved out of. There is currently $100,000 still owing on the property which is worth approx $280-300g.

It would be an investment property for us and we as landlords would make sure mum gets $200 a week rent for the next 10 years and then the house is ours.

My question is: What is the cheapest way to get this property transferred into our names. Are we able to just pay a stamp duty and take over the mortgage or do we have to go through the normal process and get a home loan for the full amount?

Any help would be much appreciated. Thanks!

 

[travelbug]

Sorry can't answer the question but
If the property is worth, say, $300,000 I'll assume rent would be $300 a week. If you give your mum $200, pay the loan (of $100,000) = $120 a week. You are out of pocket $20 a week plus rates, insurance etc.

I'm a bit confused about the- give mum $200 a week then in 10 years it's ours. If you transfer the title it's yours now, not in 10 years.

Will the $100,000 loan be transferred to you? So in effect you will be paying $100,000 for the house?

 

[PackedLunch]

Sorry travelbug I should have been clearer.

You are correct though.

Basic deal is we get the House for $100,000 and guarantee mum $200 rent per week for the next 10 years. The house will be ours once the title is transferred and to manage as we please.

So still a very good deal for us! Just looking for the most cost effective way to transfer the deed into our names and I suppose also for any hints or tips as to the differing methods for this transaction to occur.

Cheers

 

[Rolf Latham]

Hiya PL

Welcome , novel name that

Assuming that the 100 k you pay, will be to repay mums loan.

if thats the case you will need to get a new loan for 100 k, because the old loan wont have a valid mortgage to back the loan.

If you need to pay mum 100 k AND repay the loan, you will need a loan of 200 ( and stamps etc if you dont have any cash)

ta
rolf

 

[Propertunity]

Just looking for the most cost effective way to transfer the deed into our names

The most cost effective way to transfer title to you 2 is for your mother to write out a will leaving the property to you 2 and then to.....well....you know....pass on. But that is not what I'm suggesting

You'll need to get a $100K home loan between the 2 of you (or setup a trust - but you need specific accounting & legal advice before doing that) and buy the home off your Mum. The stamp duty will be calculated on sales price or market value - whichever is greater - so there is no escaping paying the correct amount of stamp duty.

If the property is work say $300K now. Your Mum wants $200 pw for 10 years = approx $104K all up.

It looks like she is 'gifting' you $100K
Doing interest free Vendor Finance for $100K over 10 years
You get a $100K mortgage to make up the difference
That's the way I see it happening.

Your Mum could lodge a caveat or a second mortgage over the property to make sure she gets her $104K.

 

[PackedLunch]

The most cost effective way to transfer title to you 2 is for your mother to write out a will leaving the property to you 2 and then to.....well....you know....pass on. But that is not what I'm suggesting

Funny stuff Propertunity. That would be cost effective but shes fighting fit the ole girl and will live to 100 no doubt!

So from the sounds of it the way to go about this transfer is:

Get 100,000 loan in mine and my brothers name.
Pay stamp duty on the value of the home of approx $300,000.
Have deed swapped into our names.
Rent house out to get mum her $200pw for the next 10 years.

Sounds easy!

Glad it can be done by just getting the loan for the 100g. I thought I might have to get the loan for the full $300,000 and pay the surplus back into it. Was going to struggle with this as my brother has had some bad credit that might make getting the loan a bit difficult.

Although I assume most banks would be happy to lend the money if they new the circumstances i.e good loan as there is immediately $200,000 equity.

Thanks for your help.

 

[PackedLunch]

Hiya PL

Welcome , novel name that

Assuming that the 100 k you pay, will be to repay mums loan.

if thats the case you will need to get a new loan for 100 k, because the old loan wont have a valid mortgage to back the loan.
If you need to pay mum 100 k AND repay the loan, you will need a loan of 200 ( and stamps etc if you dont have any cash)

ta
rolf

Thanks Rolf.

Sorry to ask but can you clarify the bolded bit for me?
Cheers

 

[Propertunity]

struggle with this as my brother has had some bad credit that might make getting the loan a bit difficult.

This part might be problematical for you as well But talk to an MB about it - there may be ways to handle it without paying an interest rate premium for your co-borrower's past financial indiscretions.

 

[s_t]

Wouldn't all the rent be assessible income for your brother and yourself? Might want to consider the implications on tax and the like.

 

[RightValue]

Enter a contract with your mother to purchase the property for the outstanding loan amount, $100k.

Go to your bank, tell them that it is a non market transaction.

The valuation will be at market value and you will have enough equity in the property.

Borrow the $120k from the bank to pay $100k to your mother at settlement and cover stamp duty and costs.

Stamp duty will be payable on the higher of the purchase price or the Government Valuation.

Rent the palce out and use the rent to cover the mortgage.

Give the rest of your rent to your mother and make up the balance of the $200pw between you .. it will be chump change anyhow.

This is a great deal ... don't forget mothers day ever again!

cheers

RightValue