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Helping hand to purchase IP for young adult kid

Discussion in 'Property Finance' started by thegreat, 17th Jan, 2016.

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  1. thegreat

    thegreat Well-Known Member

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    Is this scenario possible:

    The kid earns approximately 50000/year.
    Live at home, no expense, no relationship yet.
    Has saved small amount of saving for stamp duty etc.
    Expect to earn rental income gross approximately 20000/year.
    Purchase price approximately 500000.00
    Avoid LMI, Maximum borrowing approximately 400000.00
    Borrowing capacity IO approximately 400000.00
    ------------------------------------------------------------------------------------------
    To assist the kid, would it be best to gift 100000.00, in this scenario?
    Or is there a better option?
    As a parent, assisting with shortfall regularly/monthly can be considered.
    ------------------------------------------------------------------------------------------
     
  2. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    If they can only service $400k it will have to be a gift. If you loan it, it will have to be included as a liability which will further reduce their borrowing capacity.

    Normally, just a letter stating the gift isn't repayable is fine.
     
  3. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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  4. thegreat

    thegreat Well-Known Member

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    Thanks Jess and Terry for the prompt reply. Cheers
     
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  5. Omnidragon

    Omnidragon Well-Known Member

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    Best way to help us to teach mindset. Failing that, $100k.
     
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  6. Greyghost

    Greyghost Well-Known Member

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    Loan agreement to give the 100k.
    Make the 100k deductible..
     
  7. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Even where the child is purchasing a main residence the loan is generally the way to go - can be interest free.
     
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