PPOR in whose name?

So, the fiancee earns more than me and will be working consistently and training in the future. I earn a little less but will work a bit more sporadically in the future. Both secure jobs.

We have a negatively geared IP solely in my partners name. Looking to buy a PPOR, hopefully in my name to take most of the nondeductible burden.
Only problem is, looking at about a 750k PPOR, but i can only get finance for about 550 by myself.

Should we buy as purchasers in common? Will this affect our future borrowing capacity? Can i put solely my name on the title but both on our loan???

So many qns:D
 
This has far reaching effects!

Buy in your name -
you go bankrupt lose and could lose whole house.
You die - leave to whoever you want, including testamentary trust
You go insane - who will have the power to deal with it
You divorce - could still loose half to wife
Servicing - both can be on loan, but title in your name. Both liable for debt
Future investment? who title holder would get the income and deductions

Buy in her name
similar to above,
but, what if she sells without your knowledge
mortgages without your knowledge
dies and leaves it to the RSCPA
gets alzimhers and aunt Mabel has power of attorney

Both in both
JT or TIC?
JT survivor gets automatic bypassing will. What if survivor is about to bgo bankrupt? = lost house
No tax planning ability for beyond death/
TIC - what if she leaves her share to RSPCA. You will become joint owners and/or you will need to challange the will
she could leave her share to a testamentary trust to stop your new young hot spouse from 'stealing' her share after death.

etc etc
 
Any additional item that Terry didnt mention, and I'm not sure whether it's applicable to you or not, but FHOG. Are one of you or both of you eligible?
 
I meant solely for tax purposes, not protection and other benefits, which option would provide me with most of the non deductible burden?

Am i allowed to put both our names on the contract with the bank, but only my name on the title? I read somewhere that was possible in marriage?

Nope cant FHOG as the PPOR will be around the 750 mark in WA. Oh wait the 3k, yeah i guess so!
 
non deductable burden?

You mean that down the track you would like to purchase investment properties in just one name, and leave the others liabilities off the home loan appication?

This is possible with some lenders, but in practice, its not a great idea. Banks limit your affordability for a reason. If the bank says you cant aford it together, then perhaps you should reconsider.

Can you get a loan solely in your name with your current income for that amount? its a moot point otherwise, and the loan needs to go in both names.
 
non deductable burden?

You mean that down the track you would like to purchase investment properties in just one name, and leave the others liabilities off the home loan appication?

This is possible with some lenders, but in practice, its not a great idea. Banks limit your affordability for a reason. If the bank says you cant aford it together, then perhaps you should reconsider.

Can you get a loan solely in your name with your current income for that amount? its a moot point otherwise, and the loan needs to go in both names.

Hrmm I think I haven't been clear.

Basically i will not be working consistently in the future, so i want the least amounts of IP $ in my name because our costs wont be deductible.

We also need to buy a PPOR, so i figure, i want to use my loan capacity for this. However, i cannot afford the property on my own, so will need to buy it together.

I was just wondering the best way to buy the PPOR?

1. If its tenants in common, do i need to put down the % that i own on the initial offer for the house?
2. Is this allowed to change depending on what the bank will allow for settlement?
3. Will the names on the title be the same as the % that each person owns of the loan?

Also the remainder of my partner's capacity we will want to use for investment purposes, will this hinder her capacity?
 
Hrmm I think I haven't been clear.

Basically i will not be working consistently in the future, so i want the least amounts of IP $ in my name because our costs wont be deductible.

We also need to buy a PPOR, so i figure, i want to use my loan capacity for this. However, i cannot afford the property on my own, so will need to buy it together.

I was just wondering the best way to buy the PPOR?

1. If its tenants in common, do i need to put down the % that i own on the initial offer for the house?
2. Is this allowed to change depending on what the bank will allow for settlement?
3. Will the names on the title be the same as the % that each person owns of the loan?

Also the remainder of my partner's capacity we will want to use for investment purposes, will this hinder her capacity?

One on title 2 of loan is possible for spouses.
 
1. If its tenants in common, do i need to put down the % that i own on the initial offer for the house?
2. Is this allowed to change depending on what the bank will allow for settlement?
3. Will the names on the title be the same as the % that each person owns of the loan?

Also the remainder of my partner's capacity we will want to use for investment purposes, will this hinder her capacity?

1. yes
2. not usually, and the bank see you both as liable for the full debt regardless what percentage you own.
3. as above, you cant part own a loan, you are in for the whole lot.

When you go for an investment loan, your income and expenses will be calculated along with the current interest rate etc.

The best way to make sure you have the best borrowing capacity is to reduce your non deductable debt and increase your families income.
 
1. yes Splits can be changed and only finalised on the transfer
2. yes, but need to finalise quick.
3. All borrower liable for whole debt, both jointly and own their own.for the next loan applied for the whole debt will be factored in (one or 2 lenders will consider assessing you on your share).


seek legal advice before attempting anything above.
 
Okay, thanks guys!

Bit crappy that they include the whole loan amount in calculating remaining capacity! Not really anyway around this is there, unless she buys the PPOR solely in her name too i guess
 
the legal system recognises married couples as a unit, so why would you expect the financial system to be any diferent? theres lots of advantages to being married, this issue isnt such a disadvantage.

As Terry said, there are some lenders who dont calculate the full amount owing, but in practice if as a family unit you cant afford the loan, why would you try as a 'single'? Are you recieving income from somewhere else the lenders dont recognise? Are your living expenses so much less than the calculators the lenders use?

There are better ways of increasing your borrowing capacity.
 
the legal system recognises married couples as a unit, so why would you expect the financial system to be any diferent? .

No, the legal system in Australia recognises each person as a distinct separate legal person. If a wife goes bankrupt the husband's assets in his name are generally safe for example. In some countries this isn't the case - Japan for example.

With loans it is because of the way the contracts are structured. Banks could make one borrower only liable for 50% of the loan, but it is better for them to have 2 people liable for the whole debt separately. It comes down to the golden rule - those lending the money decide the terms.
 
Your the lawyer Terry, perhaps unit wasnt the best description. I was referring to holding assets jointly, having special exemptions for taxes, stamp duties and other dealings with government etc.
 
So question, does it matter wat % we put for the tenants in common then? If they will consider the whole loan to each of us anyway?


If we were to purchase a further property, would we just buy in common again? How do they calculate how much we can borrow?

Also, we're not quite married yet...in a few months!

Also, no i dont have any dodgy sources of income haha, just do not understand how the financing works after the intial property!
:confused:
 
Its great that your thinking about future properties and how it works before making this purchase.

It doesnt matter to the lender what % of tenants in common you are. It might be important in other areas (tax for instance).

You dont have to buy in common for this or future properties. You need to decide on the struture that best suits your goals.
 
Other structures...like trusts?

Okay one more question:

Say we are both currently working. My income is going to be sporadic in the future, partners will be large. Say we are buying a house that will be our PPOR for 5 years then will be rented out.

Aim for all our properties will be buy and never sell, using increasing equity. (unless underperforming)

Should i not do tenants in common 99% my partner, 1% me? That way, we get the largest negative gearing benefits in the future, increased CGT willl be unlikely an issue if not selling. That way i can use most of my servicability for a loan which is deductible at a higher rate(my partners). For the next 5 years as a PPOR will be no different whatever %.

>>????
 
Waaaaiit....

So i can max borrow 85% of the loan neeeded, she will need to supplement 15%.

Will we still be able to put the title in her name 99% as tenants in common??
 
Other structures...like trusts?

Okay one more question:

Say we are both currently working. My income is going to be sporadic in the future, partners will be large. Say we are buying a house that will be our PPOR for 5 years then will be rented out.

Aim for all our properties will be buy and never sell, using increasing equity. (unless underperforming)

Should i not do tenants in common 99% my partner, 1% me? That way, we get the largest negative gearing benefits in the future, increased CGT willl be unlikely an issue if not selling. That way i can use most of my servicability for a loan which is deductible at a higher rate(my partners). For the next 5 years as a PPOR will be no different whatever %.

>>????

I generally advise clients not to buy 1%/99%. I can see only negatives such as you will always be required to be on the loans, even when your income is nil. this just doubles risk.

You can control the property by lodging a caveat and will have equitable remedies if your spouse leaves it to someone else in her will too.
 
Waaaaiit....

So i can max borrow 85% of the loan neeeded, she will need to supplement 15%.

Will we still be able to put the title in her name 99% as tenants in common??

Not sure what this means exactly, but with spouses the loan can be in both names with just 1 on title.
 
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