Borrowing strategies / options with family

Open to ideas as I'm a novice in this area about options I could work out with family who want to assist with funds/loan of $$ for a development.

Where family are happy to loan $$$ towards a small townhouse development.

What Options we could come to for repayment of moneys... at a % interest rate, silent ownership in the development, family living in one of the townhouses rent free.... I'm not sure what options could work (still to sit down and discuss with family but everythings on the table)

 

They want a % return or a share ? What do you bring if they bring finance ?
Do you have it all costed incl taxes like GST etc ? Lenders will want to see that.
Whats the plan - Sell or keep ? How much profit ?

The family living rent free will be a tax and GST issue....Best avoided.

 

Easiest would be for them to lend at interest wih a mortgage.

 

This issue needs a consideration of what your family is trying to achieve and the purpose of the loan. This might create conflict later on and you should have a clear understanding among the family of how and when you will lend money or provide some other type of assistance.

This could create problems in the future. Don't just run in thinking of how to do the loan or structure it for tax. The family should be first in your thinking.

 

What Terry said, making sure there is a term on the loan e.g. 18 months, perhaps with penalty interest if not repaid by then (so its clear you intend to repay the loan and there is some incentive for you to do so).

A broader discussion with family is useful so no siblings feel like you got a special deal.

Also bank may want this characterised as a gift so its treated as your equity, not debt.