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Financing Reno/extension

Discussion in 'Property Finance' started by Sk71, 7th Nov, 2015.

  1. Sk71

    Sk71 Member

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    I moved in with my mother last year to support her through cancer treatment (she has the all clear) and we have decided to make it permanent. Problem is her house is tiny. Mum owns her house worth about 450-500,000 and is 72 and retired. She is on the pension and has some money in The bank. I have an IP (negatively geared at the moment) which I took some equity out of last year to 80%lvr I think it has risen again in value. I have also just had a baby an am on paid maternity leave. We really need to extend mums house so it works for us both and the work will be about 150,000. We could rustle up $30,000 between us but would need to fund the rest. I owe about $240,000 all up on my ip and equity release.
    How can we fund this? I will be able to make repayments once I go back to work ? Before? I also am not sure Where (if anywhere) I stand legally if she needed to sell to go into a nursing home.
    Do we have any options or would we be better off selling and buying elsewhere and both going on the title (reluctant to do this as we love where we live).?
     
  2. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    No income ill make it tough.

    Mum may be able to borrow a bit with a reverse mortgage

    ta
    rolf
     
  3. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    You could not borrow against your mother's property as you are not the owner. You could borrow against your property, if you had enough equity.

    You could then lend her the money or gift it to her. If you just gift it then it is her money, her asset. This could effect the pension - possibly litlte to no effect if she is still under assets limit. If you die that will not form part of your estate, if your mum dies first it will be part of her estate. If it is a loan it can come back to you and then her property divided up. If you die first with a debt owing to you then consider if you would want this debt forgiven or if you want your mum to pay back your estate so it can be distributed via your will. Consider the ability of your mum to do this too.

    Many other issues too - disputes between you. What if you fund it and then she kicks you out?
     
  4. Sk71

    Sk71 Member

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    Thanks. I looked at reverse mortgages - compound interest really puts me off.

    I am 44 and have lived with my mum on and off for long periods of my adult life and we respect each other enormously. Cannot think of a reason that would ever result in her kicking me out plus she loves my daughter far too much!!
    If we sold could we use the proceeds as A deposit and I borrow the rest?
     
  5. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    You generally need security to borrow more than $30k
     
  6. Sk71

    Sk71 Member

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    Wouldn't the new house be security?

    If push came to shove I could sell my ip but I really don't want to as my super is not great due to living overseas and going to uni for too many years! Looks like I might need to bank on a lotto win!
     
  7. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Oh, you mean if your mum sold? If you both were on title you could both go on the loan. Another method would be to buy part of your mum's property. 10% say. This would minimise stamp duty but allow you to jointly borrow.
     
  8. Sk71

    Sk71 Member

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    Thanks so much looking at a plan b now.