Hi There
Just have a bit of a question. At the moment I am renting and looking at buying a house for around the $350,000 mark (this is about as cheap as they get in the area I am looking at - Northern Gold Coast, QLD).
Anyway, I currently don't own any property and also not eligible for the FHOG (already used it but sold the property). I am struggling to save a deposit because rent / living expenses are so dear etc. My wife and I both have reasonable incomes (combined ~90k gross pa). Basically if we were a year early in buying I think we'd be fine finding finance etc because of 100% lends and even 106% lends etc, but due to the "Credit Crunch" etc now this would be impossible.
Anyway down to my question, wanting to buy, but not having a deposit (we've got nearly 15k saved for the purchase costs), I am trying to find an innovative way to get a deposit. I am a bit conservative at the moment so if I could avoid doing 100% (well, I applied for a 100% loan a little while ago but got knocked back anyway because my wife has only been in a temporary employment role) then the house price dropping and going into strife negative equity it would be preferable.
My father has a large sum of $ in the bank earning interest (which he has had for about the last 5 years in term deposits) because he is getting ready to retire in about 7 years time, I was just thinking today given the interest rate cuts that he would now be getting about half of what he used to get in interest for it because of all the rate cuts. Im trying to think of a win win situation where not only I win by getting approved for a loan but he can earn more for his $$ than just leaving it in the bank earning interest and then paying tax on that interest).
Can anyone help me try and find a way to make a property purchase with him paying something like 15% of the purchase price (to avoid LMI) attractive to him?
I'm thinking something like, I pay the purchase costs (15k), he pays the 15% ($52,500) and a loan of ~297500. Obviously by him forking that out, I would save about $70 per week on a mortgage, which I could pay to him rather than the bank. At this rate to pay him back for his contribution it is going to take 14 years. I'm thinking of some sort of agreement to do with "upon selling the house, he will be entitled to 20% of the proceeds if there is a gain in the value of the property".
Eg in 5 years time if we sell for 450k, he would get $90,000, we would get $360,000 (and then pay the bank back $300,000) - so he would earn 40k on his money and we would earn 60k but be the ones paying the mortgage and running costs of the property.
Obviously there are a few flaws in the above, eg that we decide we don't want to sell, or dad needs his money back before 5 years or before we are ready to sell, or something similar.
Does anyone have any similar sort of agreement in their own travels or feedback on the above?
The only other ideas I have had are to try and get a personal loan from one source and then use that as a deposit somewhere else but I dont think that can work even if the bank doesn't query where the "deposit monies" are from.
A "Family Pledge" type product would also be of consideration to me as my father owns his own home outright, but I don't think its fair to tie his property up if he wants to sell in the next 5 years.
My only other idea is to ask him if he was interested in purchasing the property entirely (or maybe we could get a 50:50 loan or something I dont know), we sign a 5 year residential lease on it with him and pay slightly above market rent, and he gets the full benefits of negative gearing (as he earns ~75k p.a.) and at the end of the 5 years hopefully we will have enough $ to transfer the house into our name and buy him out or something.
We have a crystal clear credit rating, have borrowed 20k before and paid that back quickly and also borrowed 200k for a previous house which was paid back in full when the house was sold a year later.
Thanks all and sorry for the long post.
Just have a bit of a question. At the moment I am renting and looking at buying a house for around the $350,000 mark (this is about as cheap as they get in the area I am looking at - Northern Gold Coast, QLD).
Anyway, I currently don't own any property and also not eligible for the FHOG (already used it but sold the property). I am struggling to save a deposit because rent / living expenses are so dear etc. My wife and I both have reasonable incomes (combined ~90k gross pa). Basically if we were a year early in buying I think we'd be fine finding finance etc because of 100% lends and even 106% lends etc, but due to the "Credit Crunch" etc now this would be impossible.
Anyway down to my question, wanting to buy, but not having a deposit (we've got nearly 15k saved for the purchase costs), I am trying to find an innovative way to get a deposit. I am a bit conservative at the moment so if I could avoid doing 100% (well, I applied for a 100% loan a little while ago but got knocked back anyway because my wife has only been in a temporary employment role) then the house price dropping and going into strife negative equity it would be preferable.
My father has a large sum of $ in the bank earning interest (which he has had for about the last 5 years in term deposits) because he is getting ready to retire in about 7 years time, I was just thinking today given the interest rate cuts that he would now be getting about half of what he used to get in interest for it because of all the rate cuts. Im trying to think of a win win situation where not only I win by getting approved for a loan but he can earn more for his $$ than just leaving it in the bank earning interest and then paying tax on that interest).
Can anyone help me try and find a way to make a property purchase with him paying something like 15% of the purchase price (to avoid LMI) attractive to him?
I'm thinking something like, I pay the purchase costs (15k), he pays the 15% ($52,500) and a loan of ~297500. Obviously by him forking that out, I would save about $70 per week on a mortgage, which I could pay to him rather than the bank. At this rate to pay him back for his contribution it is going to take 14 years. I'm thinking of some sort of agreement to do with "upon selling the house, he will be entitled to 20% of the proceeds if there is a gain in the value of the property".
Eg in 5 years time if we sell for 450k, he would get $90,000, we would get $360,000 (and then pay the bank back $300,000) - so he would earn 40k on his money and we would earn 60k but be the ones paying the mortgage and running costs of the property.
Obviously there are a few flaws in the above, eg that we decide we don't want to sell, or dad needs his money back before 5 years or before we are ready to sell, or something similar.
Does anyone have any similar sort of agreement in their own travels or feedback on the above?
The only other ideas I have had are to try and get a personal loan from one source and then use that as a deposit somewhere else but I dont think that can work even if the bank doesn't query where the "deposit monies" are from.
A "Family Pledge" type product would also be of consideration to me as my father owns his own home outright, but I don't think its fair to tie his property up if he wants to sell in the next 5 years.
My only other idea is to ask him if he was interested in purchasing the property entirely (or maybe we could get a 50:50 loan or something I dont know), we sign a 5 year residential lease on it with him and pay slightly above market rent, and he gets the full benefits of negative gearing (as he earns ~75k p.a.) and at the end of the 5 years hopefully we will have enough $ to transfer the house into our name and buy him out or something.
We have a crystal clear credit rating, have borrowed 20k before and paid that back quickly and also borrowed 200k for a previous house which was paid back in full when the house was sold a year later.
Thanks all and sorry for the long post.
