Hi gidday, iam new.

A

atti

hi i've been reading this forum since yesterday morning and havent slepted.

i am looking for some financial advise on google and ran across this site so i thought i'll join up and ask a few questions from some more experience investors.

here is the scenario, my mum has just recieved a settlement from a divorce 275k. (300 but lawyers basically stole 25k for doing nothing).

she was married but never owned a property before, her ex has already got a property before their marriage, her name was never put on the title even after marriage. is she still entitled to FHBG ?

i've found her a house around her old area on nice block of land for 330k and she has signed to contracts to buy it. i am in the process of finding out whats the best loan for her as her income is quiet low, single mum works 2-3 days a week with yearly income less then 20k. what sort of loan products would suit her ?
theres a homestart (SA govt) but they dont lend enough. 80k

i am advicing her to buy the property but try and borrow 200 k and put in 140 cash and save the rest (150k provided FHOG) for investing on second property to which we can go joint names in. is it a good idea ?

we're like kinder of mother/son team, i am reasonablely still young, i've got a property at 180k now worth around 270k-290k. with 70k loan still left. also thikning if she would help me out pay this one off so we can investing in new property.

thanks
Mickey
 
$200,000 is a huge amount of money for a person with an income of only $20,000 to consider borrowing.

I cant see how this would be in your Mums best interests.
 
atti said:
just recieved a settlement from a divorce 275k. (300 but lawyers basically stole 25k for doing nothing)
Click to expand...

If that's true Mickey, seems like the easiest and best paid thing to do is to basically sue the lawyers and get your 25K back.....or did someone sign a contract with them before they acted on your behalf and they were lawfully entitled to every penny of the 25K ?
 
Sounds like you giving your mum REALLY bad advise. A $200K loan on an income less than $20K, would not even cover the interest payments when the interest rates go back up to 9-10% in a few years.
On top of that you want to also get a joint investment property with your name on it, and also help paying off your current mortgage.
Looks to me like your more concerned with your own interests, and getting your gruby little hands on as much of the money as possible, rather than providing your mother with sound financial advise.

Thanks to your advise, I'm looking forward to seeing your mum on A Current Affair talking about how the "greedy" banks are repossesing her home.
 
lawyer thing was suppose to be charged on fix rate @ 14500 then the lawyer that was representing us moved firm or got fired, and the boss of the firm takes over at last minute when everything is finished and billed out 25k.. anywayz thats another matter behind us now.

yes it was her ex's PPOR she moved in after they got married and moved out after 6 years.

please dont judge me on greed, as i said its mother/son team.

i worked out that together we have better chance of creating wealth.

i've already got a property under my name rented for 250 p/w ( but its our's).
obviously i am not planning to get married soon or have a women i can trust other then mum to create wealth.

what i really wanted to ask is not whats her best interest in 275k she got but OUR best interest as a team to invest in properties.
(i know it sounds bad ^_^ )
 
300k in six years. Marriage can be quite a handy investment.

I think it was Rod Stewart who said,

"Instead of getting married again, I'm going to find a woman I don't like and give her a house".
 
Let's just put the team aside for now.
Your mother works part time with just enough income - $20K to live.

Your goal is to increase your IP portfolio, you already have a property worth $270K+ with only $70K owing. I am sure you are more than capable to purchase on your own two feet.
 
You mention she earns $20k a year. Does she also receive FTB A and/or B? How old are children or are you the only "child" (you mention single mum)?

If $20k is her only income then there's noway she'll be getting a loan for a PPOR...end of story.

Regards
Steve
 
atti said:
here is the scenario, my mum has just recieved a settlement from a divorce 275k.

she was married but never owned a property before, her ex has already got a property before their marriage, her name was never put on the title even after marriage. is she still entitled to FHBG ?
Click to expand...
No, sorry, she's not.
atti said:
i am in the process of finding out whats the best loan for her
Click to expand...
I'd use a mortgage broker. I guarantee they'll consider a lot more loan options than you even know exist, let alone have the time and expertise to check out.
atti said:
i worked out that together we have better chance of creating wealth.

i've already got a property under my name rented for 250 p/w ( but its our's).
obviously i am not planning to get married soon or have a women i can trust other then mum to create wealth.
Click to expand...
This all sounds great now, but you never know what's around the corner. You could - probably will - meet a lady, and Mum could - probably will - meet a new man, particularly over the long time-frame of a property investment.

You can both have an investment property on your own, and that's what I very strongly suggest that you do.

I presume you have a better income than Mum, and you have plenty of equity, so you shouldn't have any trouble getting your own portfolio going. There's no need to pay off your existing IP, just redraw existing equity. In fact you'd be crazy to pay off a tax-deductible loan during your accumulation phase! If you have extra funds, put them in an offset against the IP, so that if you want to buy a PPOR in future, you can use the funds in the offset and the loan balance on the IP becomes tax-deductible, whereas if you redraw to buy a PPOR, that wouldn't be tax-deductible. So that takes care of advice for you.

As for Mum, I suggest she use some of the money as deposit(s), and put the balance in an offset account to cover the likely cashflow shortfall each year, so that she doesn't have to rely on her income to cover the cost of holding her IP(s).

Running some sums, I'd be tempted to encourage her to buy, say, 2 well-located IPs for $250K each, or one @ $500K, depending on where you think growth prospects are best. Assume $20K purchase costs, total cost of getting in $520K. Rental income @ 4% = $20,000.

She needs to borrow $520K - $275K = $245K to settle. Interest @ 8% (allowing for increases) is $19,600, and there'll be approx $5-10K of other costs per year to hold (rates, repairs, insurance, management fees, etc).

I recommend she actually borrow $300K, and put the $55K that she doesn't need for settlement in an offset account, and use that to cover any shortfall in cashflow each year. She's got 5 to 10 years of expenses covered there, by which time she should be able to refinance and repeat.

I know that she doesn't have a high income, but given that $300K is only a 60% lend, and outlining her plan for covering mortgage payments and other expenses, I'm sure a broker could find a lender who'd be willing to do this deal.

Good luck to both of you.
 
thanks tracey thats sort of views i am after.


yes FTB A and/or B? one child 8. i am from her first marriage

If $20k is her only income then there's noway she'll be getting a loan for a PPOR...end of story.
Regards
Steve
are you really a mortgage broker ? so someone with 275k cash cannot borrow sums of 300k ? even though i'll be giving her a hand, obviously i cannot be on the paperworks because its her PPOR (i'll probaly be living there :) we've demonstrated good savings records on our other investment and have payed almost 40k off in 2 years with low income.
 
atti

Lenders look at servcieability when working out what they will lend you as they wont to ensure that you can afford to pay back the loan.

What Steve is referring to in his statement is that on a declared income of $20,000 most lenders would not approve a loan amount of $300K.
 
Er, without stating the obvious here (although noone else has), why not ....

Buy a $300k house with a $275k deposit and get a loan for the $25k+fees, stamp duty etc etc

or the most obvious

Buy a freakin $250k (or whatever it works out to be) house/unit/townhouse so you buy the entire thing cash, pay stamp duty etc cash, pay everything cash, ignore the banks completely. I know that's what I would do on a low income with a huge lump sum if I didn't own a house. That would have zero affect on any of her payments, other than her losing rent assistance but duh, free accommodation cancels that out already.

Assuming this is for a PPoR of course. If its for an IP she'd be an idiot to get a loan for one, she'd have no tax to offset with negative gearing and Centerlink takes a huge slice out of your pay (earning only $20k as a single parent would entitle her to a considerable amount of parenting payment single, since she's already over the $65 a week limit she'd lose pension at 50c in the dollar so if the IP rents for $200pw BEFORE any deductions her pension would go down by $100pw, if that takes her pension to zero then she loses all the juicy pension concessions, pension card etc - they don't care if she was only positively gearing $10 a week from the rental, its the $200 base they look at) and rental income would also chomp into her FTA/FTB and reduce her child support so sticking it in a term deposit would likely pay better than an IP. Investment life looks very different when you're a very low income earner.

This is all assuming she's getting a pension, which she's downright stupid not to be claiming on $20k. I used to earn $35k and got the single parent pension, rent assistance etc etc, it was brilliant. Kinda sucks when you stop being single and they start cutting you down once your partner earns more than $4k, that's just rude. *sigh* why do singles get paid so much more than couples?
 
I agree with RumpledElf... I think she should buy a house with what she has and have no loan for PPOR.
once she's settled and has some more financial experience, then you could maybe consider some IP options.

My only other suggestion would be that you buy the house and she rents from you, assuming that she qualifies for rental assistance.

I wouldn't buy a house together..... there is too much risk for her. She has no way to recover from debt if something goes wrong.

Pen
 
I agree with Steve and many others. She simply can't afford a home loan on her current income. I'll admit it's possible to borrow the money, but your Mum would go broke trying to cope with it. If she were working full time it would be a very different equation.

Given your own equity position you've probably got plenty of options. The truth is you'll actually be able to get further ahead on your own without a partnership with your Mum.
 
What does your mum want?

Is she comfortable with borrowing a large amount of money (assuming she can get the loan) with a small income? What will happen when interest rates rise again? Can she still afford the loan if rates rise 2%-3% or even more?
Marg
 
ive sat down and did the calculations, as long as i am living with her she would have no problems.

but i think a loan of this magnitude would tide her down for too long, as she is 48 i think she would want to do abit of traveling and have room to move with her cash.

i am trying to opt her to get a homestart finance for just enough to buy property 330k(345 inc stamp duty fees etc) so she borrows 90k and puts in 255k cash.

and her monthly repayment over 30 years for the 90k loan is 385$ P/M thats pretty good deal considering other lenders changing around 500 just fornight.

still leaves her with 20k to spend on holiday and or renovations.... :p

ok i'll admit it, i am in a work accident earlier this year and my left elbow is pretty stuff, i damaged some nerves, then mid this year i broke my wrist from big motorcycle accident which requires pins and screws. so 08 has been a bad year i've not worked.... it was done on track so no insurance claim... i am pretty stuffed as i am used to do labour/forklift/storeman jobs now i am 1 handed crimple... so i am looking at mum to take care of me ... ^_^ anyone else here is slightly disabled ???

work cover claim hasnt gone through yet, its been 7 months =\
also anyone know good lawyer in adelaide ? my ex boss got rid of me because i was injured i dunno how to prove this :((((
 
investor888 said:
Sounds like you giving your mum REALLY bad advise. A $200K loan on an income less than $20K, would not even cover the interest payments when the interest rates go back up to 9-10% in a few years.
On top of that you want to also get a joint investment property with your name on it, and also help paying off your current mortgage.
Looks to me like your more concerned with your own interests, and getting your gruby little hands on as much of the money as possible, rather than providing your mother with sound financial advise.

Thanks to your advise, I'm looking forward to seeing your mum on A Current Affair talking about how the "greedy" banks are repossesing her home.
Click to expand...

Second that

sorry new guy, no hard feelings....
 
Atti, I really would suggest that you send your mum to see a Mortgage Broker, or someone who knows what they are talking about. To be honest, your advise will only get her into financial trouble.

and her monthly repayment over 30 years for the 90k loan is 385$ P/M thats pretty good deal considering other lenders changing around 500 just fornight.
Click to expand...

If you are based your repayments on that calculation, then your mum is screwed. Just a quick calculation tells me that you worked that out at a interest rate of about 5.2% (interest only). The $500/mth calculation would be about correct for interest and principle. You seem to be assuming that the interest rate will never go up over the 30 year term. When, not if, the rates go back up over 9%, that would be 675/mth (Interest Only), or $725 (Priciple + Interest). That's double what your assuming. Plus all the cost, that would still chew up a large chunk of your mum's salary.

Now you have also revealed the TRUTH, that you may not even now be able to look after your investment as it is without your mums help. It would be very bad advise to have your mum take on a substantial loan with <20K income.

as long as i am living with her she would have no problems.
Click to expand...
So what happens when at some stage (during the life of the loan), you decide to move out.

Like others have suggested, the best option would be to look at the lower price range (275K, etc), and pay the house off in full upfront. (Or get a small loan, but have an offset account, or redraw facility). Then still park some money in that, to help with cashflow when needed.
 
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