Some creative ideas please.

[Musashi]

Hi all. I am very new here and I am after some ideas. We upsized to a bigger house early this year with a view to selling the house we were in. One thing led to another after throwing a few figures around and we decided to keep the old place as a rental (best idea I have had in a while). When buying the new place, the bank used some of the equity in the old place to buy the new place.

Now we are considering "granny flatting" the mother in law at our current address and I have had it in the back of my mind for a while that I would like to buy her place when she "moved on" as we would already have a half share in the place and we would only have to pay half to fully acquire it.

The trouble with the granny flat idea is that she will need to borrow against her house (equity unlock) to build the flat then sell her house paying out the loan and keeping the balance. I would still like to buy it but we are a little short on equity in both the properties we have to be able to do it. We also don't have a lot of spare cash either.

So my question is :- Are there any other ways to fund a purchase like this in this situation ?


Ta in advance.
Chris.

 

[Rolf Latham]

Hiya

A build loan secured to your place and paid in progress payments as the work gets done may be a solution ?

ta
rolf

 

[Intellikev]

Some Creative Ideas

We probably need more information.

Is the mother in law on the aged pension or self funded? How old is she?

Would you need to sell her property at this time?

Do the sums, would the rent you may receive from her property adequately service the build of the granny flat?

If not how much will it fall short by?

Consider you and your wife and the other brother/sister in law going guarantee for the difference? This will ensure debt is serviced and the property remains in the family.

If your mother in law is on the pension cut and paste the following link for information on granny flats.

http://www.centrelink.gov.au/internet/internet.nsf/filestores/fis027_0911/$file/fis027_0911en.pdf

Hopefully there is food for thought.

 

[marg4000]

Is Centrelink involved?

If so, proceed cautiously and get good financial advice. Once your relative moves out of her house it will be assessed and may affect any pension.
Marg

 

[Musashi]

Hi. Thanks for the replies so far.

Intellikev.
Yes she is on the pension, part Australian and part UK. She is 74.

I would like to hang on to it. She would need to borrow against it and then sell to fund the granny flat. I am hoping to avoid that and buy it myself.

The rent would be about $260 - $300 a week which would more than cover the $70k or so to build the granny flat. I think I see where you are going with this ? If she borrowed the 70k and put tennants in, the rent would pay the debt out in about 6 years. That would give me time to accumulate equity to then buy the place from her outright ?


Chris.
PS. Sorry if I sound uneducated with these questions. It would be because I am ! Still learning.

 

[BV]

Chris

If she is on pension (or about to retire) it's important to get financial advise to consider her financial situation before and after such an event.

If she keeps the property and rents it out
or you buy it of her and pay her 50% of the value of the property
these are moves which could affect her pension.