Can’t get loan but have cash

Discussion in 'Property Finance' started by Poppy, 2nd Jan, 2019.

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  1. Poppy

    Poppy Well-Known Member

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    Does anyone in finance know what to do in my situation? I have 400k cash and want to buy a 400k unit. No one will lend anything to me, broker has come back empty for a year. I need the Lon for tax purposes- what do I do? Give it to a relative then get them to loan it to me at 8%?! Strategy tips appreciated — thank you and happy new year!!
     
  2. George Poullos

    George Poullos Finance Strategist Business Member

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    I would say this is more of a tax question rather than a finance one especially if you can't get a loan for whatever reason but you have cash. There may be a few strategies that would work to solve your conundrum. Seek tax advice.

    Perhaps someone like @Terry_w can consult with you.

    As a side note, be aware that you will may still need to pay for costs such as stamp duty and legal fees. So make sure your funds to complete take this into account.
     
  3. Mortgage Capital Australia

    Mortgage Capital Australia Mortgage Broker & Private Lender Business Member

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    Buy the property in a Company name and do it as a Nodoc loan.

    Cheers
     
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  4. Terry_w

    Terry_w Mortgage broker licenced 4 tax/legal advice Business Member

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    Lend the money to a company and later have the company refinance this loan with a bank.
    related party loans.
     
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  5. Terry_w

    Terry_w Mortgage broker licenced 4 tax/legal advice Business Member

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    If you gifted it and borrowed it back the interest wouldn't be deductible because of Part IVA.

    If you lend it to a company, in its own right or as trustee, the interest would only be deductible to the company or trust, not yourself.
     
  6. kierank

    kierank Well-Known Member

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    Why not offer the $400K cash as security for the $400K loan?

    Geez, even I would lend you $400K on that basis :D.

    Later substitute the property as security for the loan.
     
  7. Mortgage Capital Australia

    Mortgage Capital Australia Mortgage Broker & Private Lender Business Member

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    Even a cash-secured loan requires servicing these days if in a personal name.

    Cheers
     
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  8. Terry_w

    Terry_w Mortgage broker licenced 4 tax/legal advice Business Member

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    this may help
    10 Strategies to help you buy a property when you cannot service 10 Strategies to help you buy a property when you cannot service

    One option may be to jointly borrow with someone who can service and to limit their ownership to 1 or 10%, you cash could be used as security or put it in the offset account. Once you can borrow you just buy out their share. minimal stamp duty and cgt - in fact these could be avoided altogether potentially.
     
  9. Poppy

    Poppy Well-Known Member

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    Thanks Terry!! Don’t fear George I have a lot more cash than the purchase price
     
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