Borrowing from parents.

Hi

I am currently looking to buy a house. My parents are willing to lend me the full amount. My question is will a bank loan me the money down the track if I wish to pay my parents back .

Thanks

 

What will it cost?
What do you earn?
How long have you been in your job?
Do you have dependents?
Do you have any savings?
How much are you going to borrow? At what rate?
How much are your expenses?

Speak to a broker. You're asking such a wide question with no info - it's like me coming up to you, a totally random person on the street and asking "I want 'something'. Reckon I can buy it?"

 

Assuming you have the borrowing power in the future, the banks would likely be able to do this. There has been some restrictions on lenders offering 'cash out' recently, but within reasonable parameters it is still possible.

I might be getting way off topic, but the question makes me wonder if there's other questions behind this. For example, what happens if the property becomes an investment in the future, will there be tax deductions available?

The answer to that depends on if the agreement with your parents is done properly. It's fairly easy to mess things up and miss out on future tax deductions in these circumstances.

If this property might become an investment in the future, then a better solution is likely to be to borrow the money from a bank now, then put your parents money in an offset account (hopefully fully offsetting the loan and thus no interest is paid). This would mean you could pay your parents back at any time and still have the loan available. There's also more chance of maintaining future tax deductibility if the property is an investment.

 

depends, when you borrow in the future, do you satisfy the Bank's requirements for serviceability? Do you have a full time job to be granted the loan amount? what is your debt to income ratio ( DTI) The Bank will also require you to use the property to secure the loan.

 

That's pretty much what we want to do.

 

I have just refinanced one of these for a client. From parents to bank

 

I'm doing one of these at the moment. If u get a loan agreement drawn up between you and your parents it increases the number of lenders that will agree to the cash out down the track.

 

To avoid possible future family problems, legally document everything, particularly if you have siblings.

The small legal costs will be well worthwhile.

 

Yes