90/10 ownership in PPOR which is likely to be turned into an IP in the 2nd year

Hi all

Am just wondering what is the implications of serviceability in the situation below. I have read Terry "do not have a 99/1 structure" due to a various implications including legal, asset protection etc. However, what I am interested to know in this example is just the way banks views this from a serviceability point of view.

Example below. Both are husband and wife.

Bob is the higher income earner of $90k per year. Annually he gets net rent of about $20k.

Jane doesn't earn any income but Job Keeper and her job security is not known after Job Keeper ends.

For the property that is about to be settled, they have structure it as 90/10 with 90 to Bob and 10 to Jane. This property will be negatively geared.

Are there any implications on Bob and Jane for this structure if any future properties bought (title) will either be in both names or Jane's name but with Bob as a income guarantee. Jane will never buy a property by herself without Bob being involved anyways.

I know that there are legal implications etc but i am only interested to know implications from the bank's perspective only. If this question has been asked elsewhere, kindly direct me to them.

Thanks.

 

Doesn't affect serviceability for the initial purchase as you mention it will be Owner Occ until the 2nd year.
The only thing that could affect serviceability is the neg gearing calcs for some lenders when it turns into an IP however as 90% will go towards Bob it's likely to have minimal affect on overall borrowing capacity.

 

If it is the main residence then it doesn't really matter. But if it is later rented out the income will be different with different ownership percentages and that will affect servicing.

Also there are a few lenders that might asses future serviceability based on your 'portion' of the loan. If you own 10% and the loan is $100k, they might assess you as owing $10k, for example.

 

makes sense. but if Bob and Jane both buy the next property together, it shouldn't matter as they are a spouse?

and if Jane were to buy in her own name, it shouldn't matter too as Bob will be the income guarantee and like you said, there are lenders who assess at the actual ownership.

is this understanding correct?

 

Yes if they are borrowing together the whole loan would be assessed anyway.
Keep in mind that Jane may need Bob but Bob doesn't need Jane (for finance that is!)

 

yep correct. thanks!

 

what are some of the lenders that recognises actual ownership? this will seem like a big plus and i wonder is there any other drawbacks to these type of lenders?