Options for delayed settlement

[sandyfeet]

Hi all, would really appreciate some input on a situation where I haven't been able to find an answer for elsewhere.

Is there a possible solution for the following scenario, where a block of land has been purchased on a 10% deposit and a delayed settlement of 2 years. If when the time for settlement occurs the husband and wife purchasing the land have had a child and are reduced to a lower income and their serviceability has been reduced, are there any solutions if we had parents who are willing to help out? The land would be purchased for an IP.

Thanks for any help,

 

[Terry_w]

Generally only equity guarantees are allowe for non owners. ie. you could use the parent's equity but not their incomes.

With a corporate trustee you may be able to swap things around to assist with bank servicing - but seek legal advice first as some states this could result in stamp duty - and other issues to consider.

 

[Jess Peletier]

When you say you have parents who are willing to help - are they willing to give a cash gift?

How far away is settlement, and which bank?

 

[sandyfeet]

When you say you have parents who are willing to help - are they willing to give a cash gift?

How far away is settlement, and which bank?

Thanks for both replies thus far,

They are in a position to potentially do that if it was paid back + interest (they did exactly this previously for my first owner build home, when CBA would not loan to an owner builder until the project was complete) but I was more wondering if they could provide security/guarantee etc.

I'm happy to learn about any option at this stage. We have not gone ahead at the moment for the above reason. 2 years is a long time and we don't know what will happen in that time.

Thanks

 

[Jess Peletier]

They can guarantee the purchase which will save some LMI but it's still up to you to service the whole loan.

I reckon your best bet is to plan the purchase on your low income, plus dependants and if it definitely doesn't service you'll need to look at ways to increase your deposit/savings to a point where it does.
A loan from your parents which you have to pay back probably won't help much as the bank will need to include it as a liability in their assessment.

Also different banks have different serviceability models so it will be a matter of choosing the right bank too.

 

[sandyfeet]

Thanks Jess, I think you are right. So best plan will be to talk with our broker to see how our serviceability will look under the lower income scenario and plan accordingly. Thanks

 

[Terry_w]

Other options to consider include an option agreement - which could allow you to walk away if you cannot get finance.