property as co borrower

Discussion in 'Loans & Mortgage Brokers' started by pvfv, 29th Nov, 2019.

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  1. pvfv

    pvfv Well-Known Member

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    Hi there

    i am looking to refinance my partners property which is solely mortgaged to her till now with bank A

    and we are looking to refinance and topup the extra equity available to be taken out. my issue is

    even-though i am going to be jointly on the Loan with bank B do i have any rights on the property

    when it eventually gets sold or any relationship issues popup?

    both banks A and B are big four. any advise is much appreciated.. thank you in advance
     
  2. Lindsay_W

    Lindsay_W Well-Known Member

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    Are you and your partner married?
    Lenders are looking for a clear benefit to you if you're a co-borrower but not on the title.
    You can be added to the title if your partner agrees however there is a cost involved.
    If you're not on the title then you won't have legal rights to the property should you split up or sell etc (that's my understanding I'm not a legal expert)
     
    Last edited: 29th Nov, 2019
  3. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    From a finance perspective you can be on the loan but there a few additional hoops to jump through.

    As to this is probably a matter of family law which is going to be very difficult to get any reliable advice on. Your rights to the property can vary significantly on any number of additional factors such as the length of the relationship, who's benefited from the proposed loan, current and future children, other joint or separate assets, lots of other things I'm in no way qualified to even think about!

    Then there's your liability to consider. She owns the property, but you're now responsible for the loan.

    Why do you need to be on the loan? Do you need to be on the entire loan? Can you be on there as a guarantor and how would that affect the legal implications?

    This can be a real minefield and proper legal advice is probably necessary, although it may only raise as more questions than it answers.
     
  4. pvfv

    pvfv Well-Known Member

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    the bank B i am talking about is CBA. in the co-borrower fact sheet they were talking about co-borrower being only significant benefiter from the property and also they said it will cost to do titles registration which is about 200 to 300$ only.

    i agree that as a co-borrower i am liable for the loan if there is a loss from sale. but my question is if there is profit from sale what would the profits go to? it cannot be just the title owner who gets the sugar and if its a salt co-borrower gets to taste it.
     
  5. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    But what if despite you being the co borrower, she makes all the repayments moving forward? Why would you be entitled to some of the profit if you didn't actually do anything other than put your name on a piece of paper?

    You're probably not going to get any concrete answers to these sorts of questions because the answers depend on the very specific circumstances as well as future behaviour. The best answer is probably, "Get legal advice". I doubt this would give you clear answers though, but it might at least make you aware of the consequences of your actions.
     
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  6. Paul@PAS

    [email protected] Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    A co-borrower has no legal rights to property as they are not a owner. You neither share in profits or losses as such. If you incur a outgoing due to the loan being enforced on you then you may (or may not) have recourse against the asset owner. You also dont incur interest even if you pay it as you are not the owner of the property.

    The lender is likely to require you to acknowledge or actually obtain independent legal advice. The solicitor would explain these issues and your rights if the loss occurred.
     
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  7. pvfv

    pvfv Well-Known Member

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    Thanks
    Thanks Peter as always great help from you. i need to talk to the banks to do it right from the begining i believe.
     
  8. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    Can I ask what is the purpose of adding you to the loan? There might be a better way to do this than simply becoming liable for everything.
     
  9. Terry_w

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

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    friggen hell - get some legal advice
    If you are a co-borrower you are just using the property as security for a loan. This does not give you any legal or equitiable interest in the property and you have no legal right to profit from the sale by merely being a co-borrower, unless the title holder is acting as trustee.


    This is not true and way off the mark. conveyancing, CGT and stamp duty would apply as well. Bankers should not be giving legal advice like this, but perhaps you have misunderstood them.
     
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  10. Terry_w

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

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    for the family law aspects see s79 of the family law act.
     
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