Seeking information on Home Loan Setup

Discussion in 'Property Finance' started by Zzo, 4th Dec, 2018.

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  1. Zzo

    Zzo New Member

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    Hi All,
    I have a query regarding my home loan as the bank isn't giving me a black or white answer.
    My Dad and I are Tenants in Common for our property and have 2 separate loans with ANZ
    When we signed up I was a trainee so it was agreed that Dad would be the guarantor for my half of the loan for the duration of my traineeship. Once I finished, I would be on better money so this then wouldn't be required of him (was how we asked them to structure it)

    Upon finishing my traineeship we went to the bank to confirm this and to have dad's name removed as guarantor. The reply we go was no, your dad will have to stay guarantor for the duration of your loan until you have paid it in full.

    This means that he is locked in and if he wanted to re-invest he is limited to how much he can now borrow.

    My question for the group is, is there anyway around this, as I can now prove that I am able to afford my loan?
    And would getting a home loan out from another bank and paying out the ANZ home loan sort this situation out.


    My partner is in the same situation as he is tenants in common with his parents.
    Would we be better off combing our 2 half loans into 1 with a different bank?

    Any advice would be much appreciated :)
     
  2. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    ANZ's policy is the same as every other lender that comes to mind. All joint owners must be on the loan, usually as a borrower, but as a guarantor is also acceptable.

    Your income is irrelevant. Since your Dad is a part owner of the property, the bank will want his name attached to the loan in some capacity. There is no way around this other than to pay off the loan or to change the property ownership (which would probably involve stamp duty and CGT).

    You've also mentioned that there are two loans, one for you and one for your Dad. If your Dad's loan is also secured against this property, then your name is going to be on that loan as well.

    The same applies to your partner's property. You can't remove the parents from the loans and leave them on the title.

    As a rule I would suggest only to borrow money on your own or with a life partner. Investing with other people can really mess things up for later.
     
  3. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    Your Dad was always going to have to be guarantor for your side of the loan, as you would be for his. It's because you both own the property, and there's no real way around it short of buying him out, or him buying you out.

    Buying with others makes things complex moving forward - if you and your partner wish to buy a home, the full debt with all your parents will be treated as though they're your own with only a few exceptions. Add to that, the banks will only attribute half of any rental income to you (or what ever percentage, as per ownership).

    Your dad will have options to invest - there are lenders who will consider only his part of the loan as long as you can service your part, but you'll do best to use a good broker to point you in the right direction on this.
     
  4. Terry_w

    Terry_w Mortgage broker licenced 4 tax/legal advice Business Member

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    Not really. As your dad is a legal owner he would need to be either on all loans that are secured by the property or as a guarantor for these loans.

    if you each owned other property with enough equity you could get the need for guarantees removed

    There is a complex legal way to remove him from the title and the loan, but this may be going to extremes.

    One of you could buy the other out possibly.
     
  5. Zzo

    Zzo New Member

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    Thanks everyone. It definitely wasn't explained to us like this when we signed up. I'm sure it's all there in fine print but what we were told was going to happen, didn't. Also thought we might have an option to both payout ANZ and the restructure it the way we wanted with another bank.

    This looks to be our best option. Apparently we need to get the loan amount down to 80% of what the house is worth market value to be able to restructure and remove guarantors.


    We're getting married next year so here's hoping its for life :) Just seemed messy having the two separate loans but can see where you are coming from where in situations where things do go sour.
     
  6. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    If you have equity in another property that's in your name, you could potentially access equity in that to pay out your share of the ANZ loan. You'd still be a g'tor for his portion due to being on the title, but he'd no longer be the G'tor for your half so his borrowing capacity would be increased that way.

    You could do the same for your partners parents too, if you or your partner had enough equity.
     
  7. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    There are 2 types of guarantee here and its important to work out whats what

    Servicing Guarantee........ dads income was used to bolster yours

    Equity Guarantee,............. dads equity on another property was used to secure yours

    Or

    BOTH

    ta
    rolf