Using parents home as additioal equity

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From: Fernando Loprete


I was wondering what the implications are if i want to use my parents home as additional equity? eg. Should i put my name on the title, and take 1/3 of the equity. Do i pay stamp duty by doing this? My parents are currently on a aged pension, will it affect there pension? Has anyone here done this before? What other ways are there in getting around this problem? Thank you in advance.
 
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Reply: 1
From: Rolf Latham


Hi Fernando

Because they are aged pensioners they would find it difficult to access their own loan - which would be my normal preferred method of limiting the guarantee - they could potentially use a No docs lend to provide you your deposit.

Remember that if you stuff it up or something beyond your control happens your parents could potentially be sold up.

Once again, people say it cant happen to me, but it could.

Ta

Rolf
 
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From: Fernando Loprete


Thanks for the reply Rolf. The thing is that i already have a few IP's, but after doing an evaluation i might need a bit more equity to do a property development, that's why i asked the above question. I am just trying to find the easiest way possible to have access to there equity.
 
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Reply: 1.1.1
From: Rolf Latham


Hi Fernando

The easiest and least risky way is to do a loan on a no docs basis in mum and dads name up to the level of the equity required, I believe you mentioned 30 %.

That way there is no mucking with titles, stamp duty and their guarantee is limited but the loan. Expect rates of around 7 % reducing to 6 % after 2 years of on time payments. This also ensures the various pension benefits are preserved since you are not on title.

ta

Rolf
 
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