Buying OO property with my daughter

Hi all

I have been reading posts on this group and have learnt so much about buying a property.
But I am still very confused about how to structure my loan to buy a property to live in Sydney.

I have a residential house in the regional NSW where we lived for about 13 years and now from last 2 years, it is our investment property.
We have moved to Sydney and I want to buy a property to live in. I am about 50, and work in a public sector. I am planning to buy a property with my daughter who is a FHB.
I am very confused about structuring the loan.
I have fully paid my previous house which is now investment property. I asked ANZ if I can borrow money from that account so I can get tax benefits too. But apparently I can not as the loan account has been closed.

They have asked me to use that house as a security for my new property.
I want to have 30% share in the house and my daughter will have rest 70%.

I have some cash about 100k to use for the deposit. I dont know where to start from??
My questions are:

1. Is it safe to use my regional house as a security to buy our house in Sydney?

2. Would my daughter be able to get some FHB benefits for her 70% share?

3. Should I choose another bank to get loan for the new property or it is better to go with ANZ as they have our existing accounts and house title papers as well.

4. Is there any other option I can try?

5. If I want to get a professional advice who should I go to ?- A mortgage broker? Solicitor ? Accountant or a bank?

Any suggestions will be greatly appreciated as I am new to all this and trying to get my head around so I dont end up ruining my retirement funds.

 

Who does the we and our refer to?

Why buy with your daughter? Is it because she cant afford to buy herself?

will you be living together?

Is she married or in a relationship? If not, what if she is in the future?

 

Thanks for your reply Trainee.
Yes we are planning to live together in that house and share the mortgage instead of paying rent.
She is not in relationship or married at the moment. But yes that question makes sense.
We are thinking if she gets in relationship this can be her investment property and I can still keep rent which might help her to pay the mortgage. It might be somewhat atleast 2-3 away in the picture as she is very career oriented at the moment.

 

She would not be able to buy something decent on her own. If I become her guarantor, I am not sure but I think I might still need to use my own property for the security?

 

What sort of numbers are you talking about here? Eg approx budget for the property?

what does your daughter bring to the table in terms of deposit and serviceability? Remember if she ever has issues repaying the mortgage, you might be liable for it if you buy in joint names. At the very least the bank selling the property would affect you.

the problem with tying together finances like this is what if she (or you) need the money for something else. Buying ppor to start a family with a partner, or move overseas for work, say. Or she loses her job.

 

We are thinking about 1-1.2 Million max. according to rough estimate she is able to get about 800K loan at the moment. She is in health sector so serviceability should not be an issue.

She has saved about 60 k in savings and definitely more by the time we will buying the property hopefully in next few months.

 

And she has a deposit of...?

hard to believe she cant find something decent for 2 people for 800k even in sydney.

 

At the moment that 60 K but thats why I am hoping to join in and contribute towards her deposit.

 

I know I can not afford to get loan on my own so instead of paying rent we can together pay towards the mortgage, if it works out right.

 

1. Depends what you mean here, but prob best not to use the house as security for the new purchase loan.

2. not if you are on title

3. Probably

4. Yes there are a few. You could borrow against the existing house and 'pay' cash for your share. you could lend your daughter as much as possible with her borrowing the rest from the bank, without you on her loan, You could act as trustee for her or vice versa, etc many options.

5. A solicitor

 

Is it still possible to borrow against that house even though the bank says the account has been closed.
She asked me to submit a new loan application.

 

The other thing is what your daughter thinks about all of this? Is she asking questions about what the risks are etc?

if not, is this something she wants to do, or just a vague i cant afford anything nice rant, and you think its a good idea for her to commit to a loan and buying a place?

buying with someone means you are affected by all their problems and life changes.

 

Yeh I think at the moment she has only some knowledge about this process. Thats why I am hesitant that she is totally relying on me for decision making.

 

I think you are right Trainee. Thats how we are thinking to buy a place at the moment, so she can get into the property market with my help and we dont have to rent anymore either.

 

You really think this is a good idea?

your financial knowledge is low. And she is relying on you. Makes me think she doesnt have financial knowledge either and doesnt understand the risks. And you want to commit a million dollars?

Best way might be to keep renting, save more and reconsider when she actually wants to act. Learn about loans and investing in the meantime.

this sounds like some vague friday night after a few glasses of wine complaining about the rent and how you wouldnt have to pay rent if you bought! But rent isnt dead money as commonly assumed. Yields are low and rent is cheap.

take a very simple example. You do this. In 2-3 years she gets married and needs the borrowing capacity to buy a family home. What then?

 

Yes

 

Thanks Trainee. Yeh I understand my financial knowledge is very low. Thats why I am trying to see what other people think.
It has always been said that paying rent is a dead money and when it is been mentioned that this is good time to enter in market, Thats where it gets confusing.
I really appreciate your well thought questions and maybe you are right that we better gather more knowledge about buying a property. Banks or accountants dont help much in these cases.
As Terry-W mentioned, I am also not keen to use my house for the security but bank was pushing for it.

 

Thanks Terry. would you be able to tell me what that process called. So when next time I talk to bank, I exactly know what to ask. Thanks so much for your time.

 

Also, is it better to get Title paper released from the bank if they are not being very helpful to borrow against my property.