Will this work?? Help parents' mortgage

[chunho01]

I recently settled on my first IP, and I'm just planning for my next purchase, which is for PPOR.

I am a skilled migrant and my parents will soon get their Permanent Residency. I want to buy an Off The Plan apartment for us using the following:

Mortgage: My name. Because parents no longer working (serviceability)
Property owner: Joint. My name and parents
First Home Owner Grant (Victoria): Use my mom's name to apply

Just wondering if the messy structure above will work?

 

[Brisbane Broker]

Why put your parents on title? Would be cleaner without them at all.

 

[Rolf Latham]

If the serviceability works that's great, parents will be on title and will need to be co borrowers or gurantors.

This may hev long term implications for both of you incl pension entitlement and joint and several liability for future borrowings etc , amongst other things


The grant I'm not sure about, that's someone else's domain


Ta

Rolf

 

[chunho01]

If the serviceability works that's great, parents will be on title and will need to be co borrowers or gurantors.

This may hev long term implications for both of you incl pension entitlement and joint and several liability for future borrowings etc , amongst other things

Could you elaborate on the highlighted points above?
1. Parents must be co-borrower if they need to be co-owner of property? Doubt bank will lend money to them, as they have retired.
2. Not sure how this will negatively impact 'liability for future borrowings' as isn't this the same for all non-rental PPOR?

If anyone else could clarify the grant eligibility, that would be great.

 

[Terry_w]

You will have to look at the relevant legislation. Generally if parents on title the bank will not lend using a guarantor. you would have to be on title. But if you are on title and have purchased a property before then you may make the purchase not qualify for the grant. But I recall reading FHOG legislation that if the purpose of being on title is just to qualify for a loan then the property may still qualify.

But you must also factor in the effects on CGT too.

 

[chunho01]

You will have to look at the relevant legislation. Generally if parents on title the bank will not lend using a guarantor. you would have to be on title. But if you are on title and have purchased a property before then you may make the purchase not qualify for the grant. But I recall reading FHOG legislation that if the purpose of being on title is just to qualify for a loan then the property may still qualify.

But you must also factor in the effects on CGT too.

You are right, I want to put my name down on the title just to qualify for the loan. Because I will be the sole person servicing the repayment. While my parents' name on the title is to earn the eligibility for FHOG. (They just migrated, so haven't had a property in Australia). So I take it that you are uncertain if this can be done?

This is a matter best for solicitor? Or should I ask my mortgage broker? Or both? I'm thinking more for both.

I thought I should gather some ideas from here before asking them.

 

[Rolf Latham]

please see below

Could you elaborate on the highlighted points above?
1. Parents must be co-borrower if they need to be co-owner of property? Doubt bank will lend money to them, as they have retired.

The bank willl use your income to assess serviceability, and add the liabilities and living costs of the parents.

As co owners of the property they need to provide either co borrowing or a guarantee, since these show "consent for you the borrower to use the property as security


2. Not sure how this will negatively impact 'liability for future borrowings' as isn't this the same for all non-rental PPOR?

Yes, but if you rent the place out in the future...........

If anyone else could clarify the grant eligibility, that would be great.

ta
rolf

 

[chunho01]

Thank you for the replies. I clearly overlooked an important point. I still qualify for FHOG in Victoria even after owning an investment property, as long as I do not live in it.

This simplifies things, I will just put everything under my name only.