Property Share Mortgage CBA

Discussion in 'Loans & Mortgage Brokers' started by JohnPropChat, 17th Mar, 2017.

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  1. JohnPropChat

    JohnPropChat Well-Known Member

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    Was browsing CBA website for something and came across this. How is this product different from say two unrelated people going tenants-in-common on a mortgage? Seems like more hurdles.

    How to apply for Property Share
    • Each borrower must be an owner of the property (no third-party guarantors) and show they can repay their portion of the home loan (prove servicing of the loan)
    • You’ll need to guarantee each others’ loans as security support
    • You must seek legal advice and all sign a Property Share Authority Declaration form before entering into a Property Share Agreement.
    Buy property with friends or family with a Property Share Loan - CommBank
     
  2. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    In a regular joint loan, each person is legally responsible for repayments on the entire loan. With CBA's property share, each person is only legally responsible for their portion.

    It's still questionable if other lenders will recognise this, but if they do, that's a pretty big deal for people who want to borrow money individually later on.

    There are a couple of catches:
    * Each person needs to lodge their own application, which means they'll each have their own fees as they apply to the product chosen. In practice this means each person would be paying the $395 annual fee. Two applications also means more work than one application.
    * The parties must be related. You can do this with your sibling, parent or second aunt, but not with your best mate.
     
    Last edited: 17th Mar, 2017
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  3. golazo

    golazo Member

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    I did this type of loan once with my mate and another time most recently with my girlfriend (now wife) through NAB 50/50 TIC. Pete is right with the separate applications but other lenders will still consider the whole debt. As you are guaranteeing each other, if my mate stopped paying his half, the bank can then call on the guarantee. This doesn't seem to be anything new from what I understand.
     
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  4. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    NAB don't have a property share loan the way the CBA does (to the best of my knowledge no other lender has it). Every lender will allow you to buy a property with another person and have a split loan, but both persons are borrowers for both splits. With the property share, you're only the borrower and legally responsible for your portion, not the other persons part.

    With split loans from other lenders, if the other person defaults on their half, other lenders will lodge a default against both people. With the property share, the CBA would only lodge a default against the person who hasn't made the payments on their loan.

    The guarantee given is only an equity guarantee. Thus if the house is repossessed, the CBA will sell it and take their money from the sale first. Even in this case they won't lodge a default against the person who has made their part of the repayments.
     
  5. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Its the new way of saying guarantor ...lawyers and insurers dont like the word
     
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  6. Terry_w

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

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    This can be done e with most lenders
     
  7. Corey Batt

    Corey Batt Well-Known Member

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    It's more of a gimmick in issuing separate statements/accounts so if there's two parties and one party wants to accelerate their repayments - they can feel like they're actively reducing 'their' portion etc.

    In reality, avoid joint non spousal loans like the plague.
     
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  8. Brady

    Brady Well-Known Member

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    That information is not correct. You can do it with your friend, uncle, parent, family, enemy if you want to.
    The example on the fact sheet actually provides a example which states:
    Example: Nick and Sue, and James are friends who currently rent a house together. They want to buy a house together but want to keep their finances separate.
    - James takes a loan for $250,000 in his name
    - Nick and Sue take out 2 loans totalling $240,000 in their names
     
  9. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    I've had a loan specifically declined about 9 months ago because the parties were friends and not related. Yes you can do it with your uncle, second cousin, etc, but I was told some sort of family relationship was required.
     
  10. Brady

    Brady Well-Known Member

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    That's not correct as per policy, credit officer getting confused with family/equity guarantor application.

    Did you escalate and get it overturned? Did the application proceed?
     
  11. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    Declined by credit and confirmed by BDM (who really does know his stuff). I've just looked at the fact sheet, it does indeed talk about friends buying together.

    Ultimately we put them on as co-applicants. Given their overall objectives, I don't think they were really bothered either way.
     

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