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How to get my dosh together

Discussion in 'Property Finance' started by MichaelMik, 10th Sep, 2015.

  1. MichaelMik

    MichaelMik Active Member

    Joined:
    18th Jun, 2015
    Posts:
    42
    Location:
    Bahamas
    G’day PCers

    I’d be interested in running this scenario past you guys. I have been approved for a house loan of $280,000. I have over $40,000 saved together for a deposit. My preference would be to go with a house and land in Canberra (fat chance getting that for $300,000). My parents might be able to take out a loan on my behalf for the remainder – say a property of between $450,000 to $500,000. To begin with I would plan on renting the proposed house out to help service the mortgage. My numbers stack up to be able to afford these mortgages with ease. However I wonder how this arrangement would go regarding tax advantages and that whole shabang, and is it an advisable arrangement or a bit messy? The property would be put into my name. Can I just refinance the loan off my folks once my income or equity increases sufficiently?


    Cheers
     
  2. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,159
    Location:
    Canberra and Sydney
    Hiya

    Will your parents be part owner or just providing their property as security for yours? Or are they gifting you money?

    If they're going guarantor or gifting money then you'll be the only owner and claim all expenses for taxation purposes.

    If they're part owners - then you'll claim whatever portion of the property you own.

    If you're buying new in canberra - consider getting it as a PPOR if servicing permits. That way you get reduced duty and the FHB grant

    Cheers

    Jamie
     
  3. MichaelMik

    MichaelMik Active Member

    Joined:
    18th Jun, 2015
    Posts:
    42
    Location:
    Bahamas
    Thanks Jamie your a legend mate.

    They would be providing their property as security. Thanks for clearing up the taxation side of things, that's too easy.

    I plan on getting something that's established and a bit of a fixer upper to get some sweat equity over time. I'd love to get a joint in inner south or inner north for the CG but its a bit out of reach so am looking in the Weston Creek area which appears quite decent value for money.

    But now that you mention it, whats your opinion on the value and benefits and potential in say Molonglo Valley for instance? :p

    Do you still get any first home owner benefits if you make it a PPOR but rented out other rooms too mates if it were an already established property?
     
  4. Redom

    Redom Mortgage Broker Business Member

    Joined:
    18th Jun, 2015
    Posts:
    863
    Location:
    Sydney (West) and Canberra
    Note that if you get your parents to go as a guarantor, you're going to have to show to the banks that you have the income ready to service that debt. For a 500k property, with no other debts etc, you'll need roughly a 75k income to service - so bear that in mind with this approach.

    If your parents 'gift' you the funds (most banks will usually ask for a letter/stat dec, some may want to see the funds), then you won't need to show serviceability for the gifted portion. If your parents are using equity to gift you the funds, they may need to go to their bank and apply for an increase to their loan - so they'll need to demonstrate serviceability.

    If you do go for the guarantor approach, set it up across two splits - one for the 80% portion of the loan secured by your property, and the other for the difference secured by your parents property. It'll save headaches when you try and discharge their security down the track.

    Lender choice may be important too - some lenders make it much easier (ANZ) than others (say Macq, who require your parents and your mortgage to be with them).

    My best mate just bought up in Weston Creek - its really a very nice, picturesque area given its surrounding around the mountains. Lots of stock so i'd be a little cautious with what you're buying, but lifestyle wise, i do think its one of the nicer areas of Canberra. Pretty well connected too.

    Cheers,
    Redom
     
  5. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,159
    Location:
    Canberra and Sydney
    Hey mate

    No worries - my pleasure.

    I don't mind the Molonglo valley - but I'd buy within the established suburbs around Woden/Weston before I purchased in Molonglo.

    Unfortunately there are no concessions for first home buyers purchasing established properties - it's only for new.

    Cheers

    Jamie