Co-borrower or Guarantor

s 8-1 = if you borrow to invest then the interest will generally be deductible.

 

It would be a good idea to enter into a written loan agreement so that the Spouse B is borrowing and onlending to spouse A.

Otherwise the only thing you are going on is a vague paragraph in an old tax ruling.

 

agree with that Terry however it gets murkier with the joint loans and only one on title. Not sure if you've aware of that case i mentioned above....its quite interesting in fact and wouldn't mind your take on it....they seem to have raised a joint loan deductibility issue there but didn't go further in detail

 

Tabone was about a unit trust arrangement where the persons where borrowing to buy units in a trust owned home where they lived. Interest was denied because it was a private arrangement.

 

Terry, when one go as a guarantor on loan....does guarantor's name appear in any bank statement? Also, from serviceability pov there is no difference between joint names vs going as guarantor is it?

 

Yes I think the guarantor gets a separate statement with their name on it. I don't think it would appear on the loan statement.

It would generally affect serviceability as if you had borrowed the money yourself.

 

hang on so serviceability will be considered as joint income or just one income being only the guarantor's? so if refinancing in future would the joint capacity will b considered for equity release or just guarantor's capacity...

 

It would be the same as if you had borrowed.

if refinancing in the future the owner's capacity would be considered. If not enough the guarantor may be needed.

If borrowing more with the same bank the same thing applies.

 

Basically I think of it like this...

1) if you are using a property as security for a loan then all owners must be a party to the loan in one way or another....borrower or guarantor.

2) if spouse A wants to assist spouse B's serviceability on a loan secured by a property that spouse A doesn't own they can join as co-borrower or guarantor.