To buy and how to buy

Discussion in 'Legal Issues' started by paguatao, 29th May, 2015.

  1. paguatao

    paguatao Member

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    We almost own our home outright, would value it around 750k. Looking down the track, hubby currently earns 100k, I'm a stay-at-home mum who plans to go back to study next year, then swap places with hubby but income wil probably reduce to about 50k+.

    We have an investment property where the rent is just about paying the interest and outgoings. After mainly nightmare tenants and maintenance, it seems we have struck it lucky with a good stable tenant.

    So we said "Never again" but now maybe we'll change our minds .... :p

    Looking for another investment property isn't the question, but including my daughter in the process is. She's only 18, is at uni and works part-time. I wanted to look at options to get her into the property ladder, perhaps even renting it out so that she can have the benefits of negative gearing.

    I understand we could go guarantor loan but in this case we'd probably be taking on a very large chunk of the loan seeing that she only works part-time?

    I would be happy to use the equity, or put another mortgage on our home to qualify for an investment loan, but would rather not have to increase our existing mortgage in any way.

    Easiest might be for us just to buy an investment property in our name as we would get all the benefits of negative gearing but I would still like to see what the options are in helping my daughter purchase in her own name. Thanks
     
  2. paguatao

    paguatao Member

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    Oops can this be moved to Property Finance (I think?)
     
  3. Brady

    Brady Big 4 Banker

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    You have many different options, but ultimately you property will be at risk one way or another.

    If you're looking to be a guarantor for security only and the loan in your daughters name, she would have to show that she could repay the loan based on her alone (with the rental income etc)

    If you're looking to buy jointly with your daughter this could get messy.

    You could look to purchase on your own again.


    You really need to sit down with a banker or broker who you can trust and let them know what you're doing and why. They should be able to provide you answers to if it's possible and point out some potential risks.

    Best of luck great to see you're looking at helping your family, just make sure it's to the families benefit. These types of senarios can go south pretty quick if everyone isn't on the same page.
     
  4. paguatao

    paguatao Member

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    yes it feels messy, and I'm only dipping a toenail in .....

    So if I do buy only in my name, and wanted to transfer the property to her at a later stage, as a first home buyer she wouldn't have to pay stamp duty (property under 430k), correct? So that might be an option, when she is working fulltime?

    Is there an easy option to do the transfer, or she would have to apply for a loan etc?
     
  5. Brady

    Brady Big 4 Banker

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    Yes but you would of have to when you purchase now, and could potentially be up for CGT when you sell.

    It would depend if there was debt on the property, transfer of title can be done with no problems (paying required taxs/fees) but would have to be a freehold property.

    If you had debt it won't be able to just tranfser the loan from your name to hers, the bank would want to ensure that she's able to repay the loan.
     
  6. paguatao

    paguatao Member

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    Thank you Brady!
     
  7. Jess Peletier

    Jess Peletier Mortgage Broker, Perth

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    Depending on your daughters wage, with rental income included it's possible she might qualify for a loan - it's worth having a chat to see exactly what both her options are on her own.
     
  8. paguatao

    paguatao Member

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    Thanks Jessica. I used one of the banks calculators and she would only qualify for about 145k (includes rent) so she would short about 100+k.

    If we take a loan and include her in it, would she still qualify for FHOG?
     
  9. Jess Peletier

    Jess Peletier Mortgage Broker, Perth

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    If it's an IP, yes she will in WA.

    Also, not all lenders are created equal so there may still be options for her.
     
  10. paguatao

    paguatao Member

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    Ok, I wasn't really sure how to read "each applicant....":

    Each applicant and/or their spouse cannot have owned residential property anywhere in Australia before 1 July 2000.
    Each applicant and/or their spouse cannot have previously owned residential property anywhere in
    Australia on or after 1 July 2000 and occupied that property as a place of residence before 1 July 2004.
    -Each applicant and/or their spouse cannot have previously owned residential property anywhere in Australia on or after 1 July 2000 and occupied that property as a place of residence for a continuous period of at least six months that began on or after 1 July 2004.

    As I would be also on the loan, but I don't qualify for FHOG (having owned residential property) but as long as I am not "an applicant" for FHOG, then "the applicant" would only be my daughter?
     
  11. Jess Peletier

    Jess Peletier Mortgage Broker, Perth

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    She won't be able to claim fhb on this purchase, but when she buys a home down the track she still will be eligible, assuming this one is an IP.

    If she was to claim FHB this time she would need to go it alone and she would not be able to use rental income in her servicing.
     
  12. thatbum

    thatbum law talking guy

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    Everyone on the title is an applicant basically.