How would the loan work? Joint Venture purchase with a non-borrower

I am in the process of purchasing a property and I have a friend who is interested in partnering the purchase with me. But the problem, he is only investing the capital (say 20%) and wants just 20% of the share. With me borrowing the remaining 80% under my name.

The question is, how would the bank see this? With say a tenant in common purchase with two names (me & my friend) but only one borrower?

Would they allow it?

If things do go belly up, will the bank only seek the 80% and not the 20% held by my friend?

The reason why my friend won't borrow is because he is a foreign national and can't borrow at the moment in AU.

Any advice would be great!

 

Two names on title would mean both has to give a mortgage.

But one could borrow with the other giving a security guarantee.

get some tax and legal advice.

 

You also need to consider the foreign investment rules.

Another way to do this may be to borrow money from him - but again complex tax rules apply.

 

Thanks Y-man & Terry, yes I am consulting my broker now and his comments were the same - that if the name is on the title then he needs to be on the loan...

+ the tax treatment is pretty complex if we need to structure it as a borrowed fund.

still need to work it thru..

 

@dboy_tomato;

Do you need the capital injection from your friend to proceed?

Can you "go it alone" without the 20% with a lesser deposit perhaps and pay some LMI?

 

This is not really correct. Loan could be in your name with him giving a guarantee.