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Joint or single application?

Discussion in 'Property Finance' started by ashimashi, 24th Mar, 2016.

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  1. ashimashi

    ashimashi Well-Known Member

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    To the investors out there with wifes, de-factos, partners etc. When you apply for finance or hit a serviceability wall, or maybe even before hitting that wall do you guys apply for the finance in joint names or separately?

    What is your personal preference? Because i have come across many friends who don't like involving their partners/de-factos/family in their investment ventures at all for one reason or another.

    For example, in such a scenario that person X has already hit a serviceability wall, and decides to add person Y in his next finance application (wife, brother, sister etc) for the purpose of being able to borrow more money, wouldn't that be a good way of getting around maybe being able to borrow more money or financing that next IP much faster? Specially if your other half or who ever that other person is has a decent income.

    Your thoughts?
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Always keep the non owner spouse off the loan. There is no point and only risk.

    One exception is when the serviceability wall is hit. but then you have to consider whether that spouse should start borrowing on his/her own.

    Where the title is in the other name then to access equity when the owner doesn't service may mean having 2 on the loan, but this should be set up so 2 are only on the LOC and the main loan is still in one name.

    Needs careful planning with a broker.
     
  3. Sonamic

    Sonamic Well-Known Member

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    Get your partner to max out his/her Borrowing Capacity first. As well as your own. Then go jointly. From what I have gathered from this forum that will get you the most mileage before hitting the wall.
     
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  4. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    If your strategy has been to do all your investing solo this far, there's probably a reason for it.

    If your partner has a significant income, is there any reason they couldn't invest on there own for a period? Keeping things separate has benefits such as asset protection and managing land tax.

    At some point when you're both approaching a serviceability wall, you could then so some things jointly. This will probably allow you to go just a little further.

    Once you start investing with another person, you're financially joined. It's very difficult to separate things from that point, you usually have to off load any joint assets. It does have benefits in extending serviceability, but there's disadvantages as well.

    Under no circumstances would I invest with anyone except my wife.
     
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  5. ashimashi

    ashimashi Well-Known Member

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    She's been having family issues, they own a family business, which she manages after her day job and it has been draining her family + her own finances for quite some time now. They just recently managed to finally sell it though, thankfully. She's been wanting to get into the market otherwise but it wasn't feasible with everything going on for her at the time.

    Besides there was no talks of heading into that direction jointly at all for that matter anyways. In fact i think talks like that are still pretty far off for us to be having, we still live separately. She actually works at CBA as a mortgage consultant, so i think joint ventures could be an avenue i wouldn't mind taking into consideration down the track if everything makes sense. She's a decent candidate :D

    I was simply asking hypothetically, down the track scenarios. Also curious to see what road others have taken in this regard.

    Yep, makes sense.
     
  6. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    If she works for the CBA she's probably got a good understanding of the future implications resulting in joint applications. What she probably doesn't understand is how much more other lenders are willing to fund. The CBA is about on par with most lenders servicing, but there's a few that still significantly stand apart. A better solution might be to diversify lenders (if this hasn't already been explored).
     
  7. ashimashi

    ashimashi Well-Known Member

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    Lets say, down the track my serviceability wall is hit (this is all hypothetical) i am just curious. I have enough deposit+means to service another loan in my eyes but won't get approved anywhere near the amount i am looking for. Lets say i simply want to use my partners name solely to service another loan, but her contribution to upfront cost was lets say 0% , she was happy and content having me use her name to be able to service another loan for example too. In that case, is it better going down the road of single application and exhausting her serviceability then moving on to joint applications, or just directly go down the path of joint applications?

    What lenders in your experience are more lenient and stand out in this aspect?
     
    Last edited: 24th Mar, 2016
  8. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    You wouldn't be 'using her name' but she would be buying property and getting the loans, perhaps with your assistance. You might even want to lend her the deposit. You should get legal advice on this aspect.

    Depending on her income I would generally suggest to clients that they own separately and go on single names on the loans. Once each has maxed out you may be able to squeeze out one last drop combined because going separately means you are still assessed as a family each, whereas going togther you are a combined family so your overall living costs combined is much less than separately x 2.
     
  9. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Unfortunately @ashimashi the best way to approach this is a very open ended question where the answers depend on the individual circumstances.

    Your partner purchasing and borrowing alone wouldn't increase things compared to jointly, but as already indicated, there's other benefits to doing it this way. It shouldn't preclude you from doing things jointly later on.

    It's not a big deal to compare a joint verses single serviceability scenario. It's best to get specific advice on both.
     
  10. TforTim

    TforTim Member

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    I've a good question, for loan application, Is that the good idea to put non working spouse?
     
  11. albanga

    albanga Well-Known Member

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    @Peter_Tersteeg I think if you invest with someone not your wife it can still work as long as there is a planned exit. I agree I wouldn't necessarily hold IP's with someone though.
     
  12. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    If she's on the title she'll need to be on the application as either co-borrower or guarantor. If you buy in your name only, I'd leave her off.
     
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  13. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Depends on which angle you look at it.

    No if you will be the owner as it adds nothing to benefit you and it also costs in terms of risk and borrowing capacity.

    Yes, from your spouse's point of view as it will give him/her greater claim on the asset in the event of divorce/separation.
     
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  14. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    If your spouce is not working, it makes no difference if they're on the application or not from the perspective of borrowing capacity. If the spouce is not on the application they still need to be disclosed and in both cases are effectively a dependant for cash flow purposes. The outcome is the same.
     
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