Accessing Equity with Caveat on Title

Discussion in 'The Buying & Selling Process' started by legallyblonde, 16th Dec, 2018.

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  1. legallyblonde

    legallyblonde Well-Known Member

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    Hello,

    I ran out of borrowing power long ago which is a shame because there were some good buys prior to everything going gangbusters! I am currently just focusing on increasing income so I can play with my equity in the future when the market is more attractive once again. Like everyone else I suppose, sitting on my hands waiting for the next 12 months to pass to see what happens.

    Moving on, my question is for a friend who luckily has borrowing power and is looking at buying a home with their parents. The property and granny flay will be in the name of my friend, their parents will have a caveat on the property on the understanding that they will have ongoing access to the granny flat. My concern is that when when my friend has paid down their loan (which is under 50 LVR) in the future and are looking to access equity that they will not be able to because of the caveat.

    The caveat holders are happy for equity to be accessed (at reasonable levels obviously) and do not have any objection. However, I have done a bit of reading on PC to get some background information and it appears most lenders would want the caveat to be removed before granting a mortgage.

    Does anyone have any experience with caveats and accessing equity?
     
  2. Terry_w

    Terry_w Broker, Lawyer, Tax advisor, Debt Recycle advisor Business Member

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    Yes it is possible.
    The caveator can consent or remove the caveat and put it back on. They should seek legal advice before doing so as it has implications with priorities.
     
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  3. Scott No Mates

    Scott No Mates Well-Known Member

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    Have they considered a life estate for the gf sad a secondary level of protection? If, they needed to lift the caveat to consent to an equity release, they could still have the right to live in the GF or the property was sold/taken by the bank.
     
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  4. Terry_w

    Terry_w Broker, Lawyer, Tax advisor, Debt Recycle advisor Business Member

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    the caveat is possibly to evidence the life interest.
     
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  5. legallyblonde

    legallyblonde Well-Known Member

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    Thank you for the replies @Terry_w and @Scott No Mates.

    It is certainly a bit messier than usual but sounds like it could work out well for everyone.
     
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  6. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    Would be easier (and compliant for Centrelink) to have a life interest in the GF.
     
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