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Help pls, want to give husband my line of credit to top up his purchase of IP

Discussion in 'Property Finance' started by bythebay, 26th Oct, 2015.

  1. bythebay

    bythebay Well-Known Member

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    My husband and I have separate finances. We hold properties in individual names only.

    My husband currently has a pre-approval for about $690k in loan in his name only. This allows for a purchase of IP up to $650k plus stamp duty & incidentals.
    He has access to 90% loans. This is an 100% lend (10% equity draw from PPOR which is in his name only as deposit for proposed IP, plus 90% lend against proposed IP).
    We have found a house on the market which we are interested in. I believe it will go for $750k at auction next month.
    I can give him $100k from my line of credit to make up the shortfall.
    My question is what's the most effective way we can structure the purchase:
    Should we put both of our names on the certificate of title? I would be putting in $100k which is probably around what he will be contributing (10% of $650k being $65k from PPOR plus stamp duty & incidentals). Should we do tenants in common 50/50? but mortgage is in his name only ... Does this allow me to deduct interest on my $100k line of credit and he can deduct 100% expenses against 100% of the rent income received?
    If my name doesn't go on the title, can I still deduct the interest from $100k I give to him? I suspect not? as it's on face value a gift? unless we draft up some loan doc between us to say I lent it to him?
    Or is all this too hard and we should try to buy something for sub $650k so all our finances remain separate?

    Thank you all in advance!!!!
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    TIC 50/50 will result in both being on the loan. All on title must go on the loan.

    If he has the pre-approval already why not just lend him the $100k (not give) and let him buy on his own. If you go on title you will need a new pre-approval.

    BTW you could only claim interest on the LOC if he was paying you the same or more interest you are paying the bank.

    see
    Legal Tip 68: Avoid 99%/1% ownership of property https://propertychat.com.au/community/threads/legal-tip-68-avoid-99-1-ownership-of-property.3237/
     
  3. bythebay

    bythebay Well-Known Member

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    Thanks Terryw! Was hoping you'd be online to read this:D
    Yes discussed with hubby will loan him

    Would've preferred to get some title to an appreciating asset with deductability when dropping 100k ... Will make exception for him :oops:
     
  4. bythebay

    bythebay Well-Known Member

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    Is this the requirement by all lenders? Could've sworn I heard some broker say it's not always necessary ...
     
  5. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Yes. All on title must be on the loan - either as a borrower or as a guarantor.

    But with spouses one can be on title but both can be on the loan (avoid if possible)
     
  6. JohnPropChat

    JohnPropChat Well-Known Member

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    Lucky man :)

    There is a legal way to *have* a share on the asset by drawing up a proper loan contract between you two. MTR recently posted about her friend doing a similar thing with her investment partner.

    I am sure, Terry can help you with the nuts and bolts.
     
  7. S0805

    S0805 Well-Known Member

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    What is the process of arranging these loans between spouses. I mean is it drawn by accountant, Conveyancers and costs around it....If anyone has done it.
    I assume it should read something like loan agreement between spouse A & B will have same T&C as per what spouse A has with his/her lender to keep it simple or is it more to it???
     
  8. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    You will need a loan agreement. Contracts can be oral, but far better to be in writing especially if there will be interest charged.

    Only lawyers can prepare legal documents - or the parties can. but you should consider legal advice.
     
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  9. S0805

    S0805 Well-Known Member

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    Consider interest will be charged....but simple loan between A & B. Terry, in ur exp.....if prepared by lawyer wat r the $$ we looking at it......
     
  10. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    I charge $990
     
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