Sell at loss or buy ex out?

Discussion in 'Investment Strategy' started by TheLake, 12th Feb, 2019 at 5:24 AM.

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  1. TheLake

    TheLake New Member

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    My daughter bought first Ppr Nov 2017 with boyfriend in Cameron Park (Newcastle/Hunter). Purchased with 95% her money. Paid stamp duty too. $500k loan. Now they have split. Buy offers are $15k down from purchase price. She has job transfer and moving to Sydney and renting. Options are to sell at a loss or buy him out and convert to investment. Appreciate all opinions except for her being a goof
     
  2. Propertunity

    Propertunity Exclusive Real Estate Buyers Agent Business Member

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    Has she got the cash to buy him out? If not, then this loan + current mortgage = can she qualify for the loan on her own? If not they may have to sell (at a loss) anyway.
     
  3. albanga

    albanga Well-Known Member

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    Based upon the information provided it doesn’t sound like she will have any option but to sell.

    If prices have decreased and she was already at 95% then she won’t be able to even do an internal refinance. Forget an external refinance at that LVR.

    You then said she is moving jobs which means almost no banks will accept her employment. If the current mortgagee isn’t one of those that would consider then I would say zero chance. Even if it were say CBA or NAB that would I wouldn’t think they would be happy with the new situation.

    Then Even if the above was all OK would the mortgage insurer still be happy and would they waive the LMI premium already paid...

    I would personally look to sell it and start again fresh.
     
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  4. qak

    qak Well-Known Member

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    Did they buy jointly? How are they going to share in the proceeds (if any, after paying the loan out)?
     
  5. larrylarry

    larrylarry Well-Known Member

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    Buy him out and you inject cash if she can’t fully refinance in her own right. But moving forward was this a good buy in the first place? Future growth? Will she live in and rent other rooms out? I would look at future potential with the house and land, and area where it is situated.
     
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  6. Terry_w

    Terry_w Mortgage broker licenced 4 tax/legal advice Business Member

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    Do the figures. LMI payable again probably
     
  7. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    Discuss with solicitor as part of a settlement of a dissolution of a relationship and it could attract concessions for duty and CGT.
     
  8. TheRayTracer

    TheRayTracer Well-Known Member

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    Not the OP, but the 95% was her money and is not related to LVR.
     
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  9. albanga

    albanga Well-Known Member

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    Its a hard one to read.
    It could be read in a number of ways:
    • She paid for 95% of the property! That would be some kind of deposit.
    • She paid 95% of their deposit which could be 20k or could be 100k.
    • The LVR was 95% and she paid the deposit.
    I took a stab in the dark at option 3.
    My comments could still be relevant for option 2 as well though.
     
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  10. John_BridgeToBricks

    John_BridgeToBricks Buyer's Agent Business Member

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    Buy out the boyfriend if possible.

    Your daughter has a chance to buy 50% of the property at a reduced price. It dollar cost averages into the property, which is a rare and compelling opportunity.
     
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  11. wylie

    wylie Moderator Staff Member

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    Wouldn't she be buying out half the property at market value today?

    Edit: Just realised value has dropped. I get what you are saying.
     
  12. willair

    willair Well-Known Member Premium Member

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    Depends on who name is on the Title if only your Daughter then I would not sell, if this is divorce then that would be a whole different matter..imho..
     
  13. Eric Wu

    Eric Wu Mortgage Broker Business Plus Member

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    how is the long term growth potential? how much is the potential rent? how much will it be negatively geared? can she afford that?

    do you have the capacity to help her to buy her ex boyfriend out?
     
  14. KittyCat

    KittyCat Well-Known Member

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    If you can help her out why not buy him out renegotiate loan and title to her name only. Then have her repay you if you are in a position to do so.
     
  15. TheLake

    TheLake New Member

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    Thank you all for the replies. At this stage she has accepted offer $610k and in cooling off period. Just to clarify, house bought for $624k, joint loan $500k, she paid $114 cash deposit, bf $10k. Despite mortgage broker having details for a week and us pushing for an answer we still haven’t heard back apart from initial estimate of $438k through Anz. Daughter and I can chip in to cover difference. So if the sale falls through we will pursue buyout. The house is bordering a new estate and is a bit dated in style/colour. Rental appraisals have been $550-$575pw.