Buying house from parents

Discussion in 'Loans & Mortgage Brokers' started by laziale, 31st Jul, 2015.

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  1. laziale

    laziale New Member

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    Due to circumstances involving moving overseas, my parents are required to dispose of their paid off PPOR. We originally planned to simply transfer the title to my name but I am now thinking of purchasing the property off my parents. I am already living in this property. We intend to:

    - Take an Interest-Only loan with offset account to purchase the property off my parents.
    - My parents will gift me the money received from the sale of the property to put back into the offset account (effectively paying no interest). I will NOT be paying any interest on this money to my parents.
    - I intend to buy another PPOR about 1 year after this purchase, taking out another IO + Offset loan.
    - Transfer the money from offset in home #1 into home #2. Home #1 becomes a negative-geared IP. Home #2 is now PPOR.

    Would putting the money received from the sale back into the offset account (pretty much straight away) of home#1 cause any issues?

    Would having an existing loan, paying no interest due to being fully offset, affect my chances of obtaining a second loan for my new PPOR after a year?
     
    laziale, 31st Jul, 2015
    #1
  2. Jess Peletier

    Jess Peletier Mortgage Broker & Finance Strategy, Aus Wide! Business Member

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    Not that I can envisage.
    Yes, you'd need to count the full amount of the loan as a liability, so that will affect your borrowing capacity.
     
    Jess Peletier, 31st Jul, 2015
    #2
  3. tobe

    tobe Well-Known Member

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    If they are giving it to you, there wont be a loan to be offset?

    You will need to pay stamp duty on the actual value regardless whether it is a gift or you take a loan to purchase the property.
     
    tobe, 31st Jul, 2015
    #3
  4. laziale

    laziale New Member

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    Say loan balance is $350k and I have $350k cash sitting in the offset account for 1 year before buying a second property to become a new PPOR. I would also have enough cash left over to pay about 15% on the new PPOR (85% LVR). Would this strongly impact my borrowing capacity for the new property?

    I will purchase the property off them, with a home loan, so it won't be a simple gift.

    I understand the stamp duty implications - no issues there.
     
    laziale, 31st Jul, 2015
    #4
  5. chylld

    chylld Well-Known Member

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    I think OP wants there to be a loan for tax deductions when he finds his new PPOR and turns this one into an IP.
     
    chylld, 31st Jul, 2015
    #5
  6. tobe

    tobe Well-Known Member

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    Capacity is impacted by your income and expenses. Having a loan of $350k is a hefty expense (regardless whether it is offset or not).
    However you might have some potential rental income to balance out the expense when you go to purchase a 2nd property.
     
    tobe, 31st Jul, 2015
    #6