Joint venture how does the mortgage work ?

[scha9799]

Hi all,

I have some fund available for 20% deposit and borrowing capacity for buying a property.

Someone (person A) has a piece of land wanted to build a house on it, however, he doesn't want to use his money. This property is register under person A's name. Person A agrees after completion of the development, we split the profit 50/50.


Question:
If I only register a caveat to protect my interest. ( I want to avoid the stamp duty )
Can I borrow money from a bank and lend the money to person A for his property development ? Will banks hold his property as a security ?

How to make this work ? if I want borrow from a bank and lend the money to Person A for development ?

anyone done this before ?

what's most cost effective way to structure this ?

Regards,
Taylor

 

[Terry_w]

Hi all,

I have some fund available for 20% deposit and borrowing capacity for buying a property.

Someone (person A) has a piece of land wanted to build a house on it, however, he doesn't want to use his money. This property is register under person A's name. Person A agrees after completion of the development, we split the profit 50/50.


Question:
If I only register a caveat to protect my interest. ( I want to avoid the stamp duty )
Can I borrow money from a bank and lend the money to person A for his property development ? Will banks hold his property as a security ?

How to make this work ? if I want borrow from a bank and lend the money to Person A for development ?

anyone done this before ?

what's most cost effective way to structure this ?

Regards,
Taylor

You can borrow money from a bank, but you couldn't use his property as security for this loan. You would have to use other property that you own.

 

[scha9799]

Is there a way to avoid stamp duty and borrow against his property ?

what about if I borrow the money from bank and lend to him against his property as second mortgage for construction purpose ? will bank lend our as second mortgage ?

 

[Terry_w]

Is there a way to avoid stamp duty and borrow against his property ?

what about if I borrow the money and lend to him as second mortgage for construction purpose ?

Yes you could borrow and lend him, but you couldn't use his property as security.

If you were related you could possibly borrow using the property with him guaranteeing the loan. But he might as well borrow on his own to do this.

Are you a licenced builder?

 

[scha9799]

no, I am no the licensed builder.

Does it make any difference if I am a licensed builder ?

 

[Terry_w]

I was thinking you could enter into a fixed price building contract with him - but this doesn't solve your problem as it would still need to be him borrowing.

 

[scha9799]

so the problem I have are

1) avoid stamp duty.

2) use a bank loan under my name.

Let's say, if I can give him $1 to buy 50% of the property and register on title.

how much stamp duty will I need to pay ? will stamp duty pay on the base of market value ? or whatever it pays on the transaction in this case is $1 ?

 

[Terry_w]

so the problem I have are

1) avoid stamp duty.

2) use a bank loan under my name.

Let's say, if I can give him $1 to buy 50% of the property and register on title.

how much stamp duty will I need to pay ? will stamp duty pay on the base of market value ? or whatever it pays on the transaction in this case is $1 ?

Stamp duty will be calculated on the market value of the amount transferred.

But even going on 50%, this would still mean he has to be on the loan as well.

It might be easier if you just lend him the 20% and he gets the loan for the rest.

 

[Aaron_C]

Taylor,

Perhaps a joint venture agreement? You could slap a caveat on the property to secure your interest and this would deter future lenders for sure. However, I think a partnership agreement of some sort would be far more useful.

 

[jonmardell]

The easiest way is to contribute the 20% from your savings or if you dont have enough then borrow against a property you own. there is no way you can borrow against the property someone else owns.

Hi all,

I have some fund available for 20% deposit and borrowing capacity for buying a property.

Someone (person A) has a piece of land wanted to build a house on it, however, he doesn't want to use his money. This property is register under person A's name. Person A agrees after completion of the development, we split the profit 50/50.


Question:
If I only register a caveat to protect my interest. ( I want to avoid the stamp duty )
Can I borrow money from a bank and lend the money to person A for his property development ? Will banks hold his property as a security ?

How to make this work ? if I want borrow from a bank and lend the money to Person A for development ?

anyone done this before ?

what's most cost effective way to structure this ?

Regards,
Taylor