Joint PPOR followed by individual IP

Hi brokers,

I have a question regarding buying a PPOR with a partner financed together jointly; if I then go to purchase a subsequent IP individually will the banks assess my servicing based on the entirety of the PPOR loan? (Like they would if an IP was purchased as tenants in common)

Is there a way of structuring the finance to get around it if they do assess the individual based on the entirety of the PPOR finance? (ie/ the title might be joint, but there are two mortgages with each in individual names financing the one title)

Thanks for your help!

 

Most lenders will assess the PPOR loan as yours although there are lenders who will take 50% if you can show that the partner can afford their share.

It’d be worth getting your options modeled out so you can see how much of an impact a joint loan will have to your plans moving forward.

Generally, we suggest if you buy jointly, keep buying jointly.

 

Why!!!!

 

Because buying jointly then going on your own is very limiting for borrowing capacity. Only a couple of lenders will split the debt and one of them has extremely tight calculators.

I’m talking about loans, not ownership. Should have said borrow, not buy, to be clear.

 

You probably wrote "buy" instead of "borrow"?

I suggest people get legal advice on ownership structure, but if they buy in one name they can always get loans down in both names - where they are spouses.

 

Some lenders will apportion ownership of debt - however this is a pool of ~10% of the lenders available, so you're limiting yourself somewhat in that regard. What remaining lenders are available may not be the most favourable for general borrowing capacity etc - so in solving one problem it may create another one.

Not the end of the world however - that's just a normal scenario with challenges like 90% of borrowers today. Make sure you speak with a broker about your intentions for each of purchases - as I can think off the top of my head some scenarios where you can maximise your borrowing capacity by using x lender for the purchase which will give a positive lender for the follow up purchase.

 

So if the loan is in both names (ie my wife and myself) I can still have ownership of the asset in 1 name, and the tax impacts are limited to that 1 person?

Cheers,
Inertia

 

Potentially yes