How can I use my parents equity to pay some of my mortgage?

Discussion in 'Loans & Mortgage Brokers' started by Allan Lynch, 11th Jun, 2016.

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  1. Allan Lynch

    Allan Lynch New Member

    Joined:
    11th Jun, 2016
    Posts:
    1
    Location:
    Perth, Australia
    Can anyone tell me if its possible to use some of the equity from my Mum's mortgage free property to pay off some of my own mortgage? I have a negatively geared investment property with a mortgage of around 400,000 and my Mum owns an investment property outright worth around 500,000. Is Mum able to lend me say 100,000 of her equity to reduce my loan amount and make my property neutrally or positively geared? If so, is it best to gift the money to me or to set up a loan agreement? Would the cost of a line of credit be no less than that of a home loan interest rate? If any one has looked into this or has some info I would much appreciate a discussion to help solve this problem.
     
    Allan Lynch, 11th Jun, 2016
    #1
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

    Joined:
    18th Jun, 2015
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    41,983
    Location:
    Australia wide
    You are confused.

    Equity is the value less the loan. It is not cash or a loan. Your mum could borrow - but then she would have to pay interest.
     
    Terry_w, 11th Jun, 2016
    #2
  3. Simon Moore

    Simon Moore Residential & Commercial Mortgage Broker Business Member

    Joined:
    4th Mar, 2016
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    556
    Location:
    Level 2 287 Collins St Melbourne VIC 3000
    Hi @Allan Lynch, welcome to the forum.

    Your mum could borrow $100,000 from a bank against the investment property to gift/loan to you if she wanted to help you out. But that being said, she could also just give you $100.000 from her bank account.

    The two investmnet properties held by you and your mum are really irrelevant in this scenario.

    Hope that helps.
     
    Simon Moore, 11th Jun, 2016
    #3
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