Hi Everyone! question regarding joint names on loan

[Raja]

Hi Everyone!

I have been reading through this forum the last few weeks and have found it really informative. I am a beginner myself in the world of property investing but hoping to learn more about it.

My current situation is that I currently own one IP in Beaudesert QLD where we bought the land last year and finished constructing the house by January this year. That is currently rented and is going well. The ownership of it is 60% under my name and 40% under my wifes name.

We are now planning to buy our first PPOR in Seven Hills in western Sydney. I am considering taking out a loan through ANZ as they have a deal with my employer where I can have the professional package without any of the fees (no application/ establishment, .7 off the variable, offset, and no monthly or yearly fees.)

The loan itself will be interest only and I will place all my excess funds into the offset as I may eventually rent the house out if we buy a new PPOR later.

My question is, is it usually better to take out the loan in one name only or it does not affect future borrowing capacity if the loan is in both the names?

Regards,

Raja

 

[sailor]

Hi Everyone!

I have been reading through this forum the last few weeks and have found it really informative. I am a beginner myself in the world of property investing but hoping to learn more about it.

My current situation is that I currently own one IP in Beaudesert QLD where we bought the land last year and finished constructing the house by January this year. That is currently rented and is going well. The ownership of it is 60% under my name and 40% under my wifes name.

We are now planning to buy our first PPOR in Seven Hills in western Sydney. I am considering taking out a loan through ANZ as they have a deal with my employer where I can have the professional package without any of the fees (no application/ establishment, .7 off the variable, offset, and no monthly or yearly fees.)

The loan itself will be interest only and I will place all my excess funds into the offset as I may eventually rent the house out if we buy a new PPOR later.

My question is, is it usually better to take out the loan in one name only or it does not affect future borrowing capacity if the loan is in both the names?

Regards,

Raja

Welcome to SS Raja...good question. Sorry I don't have an answer but I do have a couple of questions:
1. Whose name the loan goes in, might be related to who earns the most money...you or your wife....and therefore you needs the tax deduction if you rent out the property. You need an accountant for this one.
2. Future borrowing might be related to what sort of loan you go for, eg lodoc, nodoc, etc., and whether or not you are purchasing in your own names or in a trust. More of a question to discuss with accountant and mortgage broker here.

Good luck with it, and congrats for starting your wealth creation.

 

[BV]

Hi Everyone!
My question is, is it usually better to take out the loan in one name only or it does not affect future borrowing capacity if the loan is in both the names?

Regards,

Raja

Hello Raja,
If your wife works, having the PPOR in 2 names helps your servicebility
but unfortunately at the same time you will be both liable for the loan.
So if in future she decides to borrow to buy an IP
the lender will consider her as having borrowed the full loan.
Have you found a property yet?
Cheers

 

[Raja]

Thanks Sailor for the reply. At the moment I earn slightly more then my wife which is why we did our initial IP purchase with a 60 40 split to maximise the tax benefits. However for the next one I calculated we would be okay with just a 50 50 split.

Hi Bv, yes we have already found a property, I paid the deposit earlier this week so just in the cooling off period at the moment. And yup my wife is working at the moment. So if serviceability was not an issues and I could afford to get the loan in just my name would that be a better way to go?

Or it does not matter in the end as both our incomes and liabilities will be looked at in the future to determine serviceability?

 

[BV]

Raja

IMO buying it in 1 name is a better way to go.
Some partners are thinking that they are missing out if they don't have
their name on the title but that's not the case at all.
From the legal point of view if they ever split their assets
the other partner would still be entitled to a large portion of it.

Cheers