Purchasing two properties, first time borrower

I'm looking at purchasing my PPOR over the next year with a $50-75k deposit for a ~$450-550k house. As well as that, I wish to take over one of my dads property as he does not want to look after the mortgage/property anymore.

Offers of around $465k were made for the property but it might be worth a bit more than that given we're spent a bit of money touching it up. It currently owes $260k so I'm hoping to take over it as well as buy myself a PPOR based off a $110k gross income p.a with my partner who is earning around $40k gross income p.a.

We currently rent, pay it on time and have a smallish car loan ($540 p/m) which we pay properly. We have a small credit card limit ($4k).

TLDR: I wish to purchase an IP off my dad and a PPOR, both valued around $950K-$1M for only around $700k-$750k debt from a $150k income p.a gross couple.

Does this sound feasible from a lending standpoint?

 

6 times annual income is a guide to serviceability - very rough

 

This sounds like you wont be paying your dad full price for the property? What does take over the property mean? Do you have any other siblings?

 

I was thinking that would be the case.

I have a brother.Taking over ownership and the debt. Purchasing it for fair price but he would give me some money back as I have contributed substantial money into the property in the past as well despite it being under his name.

 

When you say 'take over your fathers proeprty' will he still be living there and paying you rent or would he be lving there paying $0 rent or moving out so you can rent it out? Or does he not live there and it's an investment?
Speak to a good mortgage broker asap to get an idea of what you can afford, no good trying to guess.

 

Without knowing anything about your family, this might be an issue later.

 

You can't take over someone debt. If title changes you would need to apply for new loans.

 

Keep in mind you have a car debt which will drag it down.

 

TBC, he had been living overseas for a few years until last year but he is not sure what he will do. He would live either with us or in his other property. I will speak to a broker closer to the date of making a decision.

Sorry for the confusion, I meant "takeover" as a matter of speech and didn't mean literally take over the existing debt. I understand it would require a change of title for the property, his loan to be paid out and a new loan created under my name.

I am aware of that. I get the feeling we may struggle finding a lender that will take it all on and 2nd string lenders that do will charge higher interest rates since the property is considered an IP.

 

Get some credit advice and find out.

 

You don't know any of that for sure, you're just assuming until you speak to a broker, so why wait?
A very simple look based on the details you've given, you could do it with one of the larger mainstream lenders quite comfortably - that's not credit advice as I'm going off limited data but it does pass serviceability test on the face of it.
P.s. first 'string' lenders have higher rates for Investment loans than owner occupied loans too, no different.

 

Definitely talk to a good broker now, there is no need to wait.

Be careful going to lenders, if they get a credit authority to check to see whether you can borrow the amount it will be a credit hit.

Brokers will run all the numbers before applying and see if you pass, or if you will be able to do what you set out to.

At a guess, you will have to buy your father's property first, so he can 'Gift' back your deposit so you can use it to purchase your family home, you will have to see that you don't over spend on the first purchase and lock yourself put of buying your second.

TLR: First course of action, talk to a broker.

 

I would suggest Dad get some personal tax advice. He may even be subject to 100% CGT on this property if he is non-resident now and all main residence concessions in the past could be lost. Add in duty and the cashflows may make this a costly change. Dad is required to use market values for duty and CGT rather than what the parties may agree. Any adjustment to price because of your input doesn't affect its dutiable value or its CGT proceeds. Its just means what he gets paid is less as you all agree you have invested your money into his home.

Depending on Dads situation care should also be taken about impacts on assets, income and gifting rules if he plans any benefits in the future.

 

He has owned it for many years, wouldn't it meant that he is subject to a CGT concession/discount? As in invested money into to home, I meant I helped him pay for some larger maintenance costs that he was out of pocket for.

I think we might just keep it rented out and leave it as is. It seems rather complicated selling as of now and the suburb the property is located in is still growing and gentrifying as we speak. I think long term it might be a better option just to keep it. I was entertaining the idea as an option but I think for the time being it might be better if we just leave it as is.

 

I think that is certainly a good idea, thank you.