Is this possible? Lease to own?

[s050399b]

Hi,

I have a friend who has bid and won in an auction, but is unable to find a bank who is willing to loan even 60% of the property; he can't pay more than 40% for deposit

I have no problem with the finance (I am able to get 80%), am I/we able to do this:
1) have the contract changed into my name; yes, the other party is okay
2) I get the bank loan; not a problem
3) and have a contract whereby my friend pays me 1% (or more) more than what I need to pay the bank
4) and after certain years, or if my friend can pay back the money, then the house will be transferred into his name

It seemed to be like lease to own kind of thing? Has anyone done this before?

Who can I speak to?

 

[s050399b]

and probably need to pay stamp duty and CGT too?

 

[Dazz]

I have a friend

Do you wish to remain friends ??

 

[Ausprop]

sure it can be done

 

[marg4000]

It can work out OK.

Years ago friends wanted to buy an newsagency but had to sell their home to finance it. They sold the house to a (wealthy, obviously) friend, rented it back, then bought it back some years later.

Then again, it could all end in tears.
Marg

 

[Marty McDonald]

Hi,

I have a friend who has bid and won in an auction, but is unable to find a bank who is willing to loan even 60% of the property; he can't pay more than 40% for deposit

Hi,

Do they have seriuos credit file issues? Or can they simply not afford the proposed repayments? There are many lenders out there who would do 60% even with some credit issues so I wonder if they have explored all options finance wise?

In terms of going in together it could work but tread carefully obviously?

Cheers,

 

[s050399b]

tread very carefully? pls eleborate?
and also the CGT and stamp duty which at the end of the contract which needed to effect?

 

[s050399b]

friend is on bridging visa to PR, so a sticky situation here

 

[Marty McDonald]

60% LVR on a bridging visa should be OK for a loan as long a the other requirements stack up....time to call a good broker.

In terms of treading carefully I meant just be sure you are not going to ruin your friendship and make sure you get advice about CGT etc.

 

[Perth Investor]

60% LVR on a bridging visa should be OK for a loan as long a the other requirements stack up....time to call a good broker.

In terms of treading carefully I meant just be sure you are not going to ruin your friendship and make sure you get advice about CGT etc.

I'm with Marty, even 80% for a non resident should be fine with a couple of banks, I'm pretty sure I looked at ANZ for a client who didn't have a PR, and I'm sure St George and maybe even CBA would look at it.

He'll need an income though...

At 60% I would have thought a lo doc would still be available somewhere, although if he hasn't get an ABN that would be more of a problem now ANZ have left the PAYG lo doc space (sad day that one...).

 

[s050399b]

60% LVR on a bridging visa should be OK for a loan as long a the other requirements stack up....time to call a good broker.

In terms of treading carefully I meant just be sure you are not going to ruin your friendship and make sure you get advice about CGT etc.

thanks! regarding CGT, can I nominate that as my PPOR? and transfer to friend after all repayments have been made?

 

[s050399b]

I'm with Marty, even 80% for a non resident should be fine with a couple of banks, I'm pretty sure I looked at ANZ for a client who didn't have a PR, and I'm sure St George and maybe even CBA would look at it.

He'll need an income though...

At 60% I would have thought a lo doc would still be available somewhere, although if he hasn't get an ABN that would be more of a problem now ANZ have left the PAYG lo doc space (sad day that one...).

rejected by cba though! got an income

 

[Qlds007]

Sounds to me like there must be something a wee bit deeper than a simple case of declined by CBA on income.

As the guys have already said at that lvr if everything else stacks up it would almost fall over the line.

 

[Marty McDonald]

Yeah not sure about the CGT sounds reasonable to me, it is a tax issue though so not my field of expertise.

CBA was one lender I had in mind ...hmmmmmm...maybe more to it? I would try St.George or an international bank like HSBC or Citibank (not ING though!!)

 

[Lofty]

Hi s050399b

I won't comment on the "friendship" aspect of this thread but the paperwork need to put together you idea, is a simple Instalment Contract, i.e. you buy the house and sell it to your friend with an Instalment Contract. This paperwork will work in all States, except S.A. Also, your friend can refinance you out very easily.

Obviously, if your friend can get some form of traditional finance that suits him/her that's probably the best way to go but, if not, an Instalment Contract is easy to set up.

Cheers, Paul