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Cash out unencumbered property

Discussion in 'Property Finance' started by Travis, 16th Mar, 2016.

  1. Travis

    Travis New Member

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    Scenario is 3 people on title. Parent and 2 siblings.
    Property is unencumbered. One of the siblings would like a loan to cash out for future investment.
    Both the parent and the other sibling are happy to be guarantor on the loan but are not able to show serviceability.
    How would you structure this? Loan amount wanted is about 50% LVR .
     
  2. albanga

    albanga Well-Known Member

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    Can the one sibling who wants the cash out service the debt at 50% LVR?
     
  3. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    All on title would need to be on the loan or guarantee the loan. From a tax deductibility point of view a guarantee may be better for the person that needs the money.
     
  4. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    Dependent on the serviceability, it's just a straight equity release with a single applicant, two guarantors.
     
  5. Nemo30

    Nemo30 Well-Known Member

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    out of curiosity, what effect does being a guarantor have on that persons serviceability? Would they be caught up in the joint and severally liable issue when they go to borrow themselves?
     
  6. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Same as being a borrower generally.
     
    Nemo30 likes this.
  7. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    I think for all intensive purposes you'd have to assess them all as joint applicants for servicing purposes. You might be able to avoid it if it's an investment property, but if they're all living in the property lenders will be reluctant to assess it as if only one person lives there.
     
  8. Travis

    Travis New Member

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    Also my concern, they would all need to be assessed. Although this is an investment property.
     
  9. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    As an IP, it is possible to get a loan soley against one person, with the other two as 'security guarantors'. It could be made to work, but it's still a little in the grey area.
     
  10. dabbler

    dabbler Well-Known Member

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    I would suggest that selling th e property and splitting the money would be a better idea.
     
  11. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Some lenders do treat contingent liabilities as no liability.........but terry is right when he saysmost lenders assume U hold the baby.

    ta
    rolf