Can two unrelated people apply for a loan jointly?

As opposed to a married couple, can two unrelated people apply for a loan jointly? What would be the main differences? Would there be significantly less access to products on the market / less lenders willing to lend to 2 people (e.g. friends going halfs into an IP) / higher rates etc? Any alternatives to achieve the same (meeting serviceability) with 2 unrelated people, such as one being a guarantor?

 

Yes, that's fine. No, being a guarantor isn't an option unless you can show a benefit to the guarantor, which is difficult.

Investigate forming a property holding company. Directors are guarantors but aren't on title. There's lots more to consider.

 

market lenders will generally only lend to both if they are both owners of the property being used to give a mortgage over.

 

If you have not bought with this person before just be aware that it will severely hamper your borrowing capacity if/when you want to buy on your own. If it's at all possible to buy on your own, I would suggest you avoid buying with someone who is not a life partner.

 

What would be the best set up and legal protection to cover both parties involved if we were to purchase an property together where we are unrelated at all.

 

You can borrow with someone else - doesn't have to be a spouse/famil member.

Rates/product, etc are the same.

Just be mindful of the fact that if you borrow again on your own - most lenders will assume you have 100% ownership of the liability you hold with your friend. That will reduce your borrowing capacity.

Cheers

Jamie

 

CBA have a product that is specifically designed for this - there's some risks you can't easily mitigate but (in theory, I've never seen it in real life) with the CBA product if your friend defaults you don't get a default on your file. You still lose the house if you're not willing to pay your friends share, but at least you credit file is intact.

 

You can't really set up legal protection that is 100% effective. You could both enter a joint purchaser contract to outline who does what and who pays for what, but if things get bad the contract won't save you. You will still be jointly liable for the whole debt and may need expensive supreme court action to appoint a trustee to sell the property if you can't agree.

 

Each buying as a 50% tenant in common for their respective share and each takes a loan for their portion of title. ie NO joint loans. Its about as good as a partnership can get and means joint and several liability is not a specific concern. That said, if you have a dispute its problematic to buy property with ANY other person.

A fixed unit trust is a further option BUT its subject to the deed, constitution of the trustee company and estate planning issues and a myriad of other issues

A lawyers can give legal advice on both structural and liability and death (estate) issues

 

Just avoid it. Too many cons not enough pros.

 

sorry to tag on this post, how about buying a vacant block in the names of two couples, then apply to split the land to two titles then refinance the loan, to two different loans in our own names (so technically a loan each for the half of the block) then we can get own finance to contruct our properties, or is it best that we complete the projects of building (joing our borrowing power) then split at the end. Sorry not sure if my question maked sense

 

Once titles separated each group can go their own ways.

but get some legal advice on the stamp duty and CGT and GST issues.

 

oh GST as well? would we have to pay stamp duty again as the ownership are essentially the same people?ummmmm seek legal advice from any lawyers? Thanks Terry

 

ownership would changing - 4 owners to 2 separate owners of each block. Legal ownership would change.

see my tips on how to get around stamp duty with deeds of partition.

 

thank you, I will searcb for it now, greatly appreciate

 

Legal Tip 77: Joint Purchasers of Land and deeds of partition Legal Tip 77: Joint Purchasers of Land and deeds of partition

 

cool just read it, literally answered my major question thank you so much. In relation to the CGT, isnt it only payable if its for IP, our intention is to bulld oo to live in but share the burden of buying a land? essentially we should be speaking to both a lawyer and an accountant right? in particular abt the GST?

 

The CGT laws means you would need to live in a newly constructed house for 3 months before being able to avoid CGT. There is a special rule for strata titling though.

Some lawyers advise on tax and in this case you would not need to use a tax agent. But it wouldn't hurt to use both.