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Which lenders will consider only half debt in joint ownership?

Discussion in 'Property Finance' started by albanga, 3rd Dec, 2015.

  1. albanga

    albanga Well-Known Member

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    Hi Brokers,
    Could you confirm which lenders would consider only my half of debt in a joint ownership?

    I need to consider an exit strategy if my joint owned property does not sell and that would be to simply hold it and rent it out.

    My concern is that if that happens I still want to build my PPOR but if the lender assesses the entire debt I do not think I will service as my wife is not working.

    I am confident I can service it myself even with half rent at 80% but my PPOR lender would need to only consider my debt of the IP.

    Thanks in advance
     
  2. Shahin_Afarin

    Shahin_Afarin Residential and Commercial Broker

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    Drags and AMP.
     
  3. Redom

    Redom Mortgage Broker Business Member

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    Think ME may do it too from the top of my head (haven't checked in a while).
     
  4. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    ING too
     
  5. albanga

    albanga Well-Known Member

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    Thanks guys, of those anyone more favorable for construction loans?
     
  6. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    St g is good for construction
     
  7. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    As 'good' as they can be considered at anything. ;)
     
  8. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    I find St G good - just bloody slow.
     
  9. Tony Xia

    Tony Xia Member

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    I find Westpac and CBA better for construction, these days a lot of the builders like to allocate majority of construction cost at stage 1 and 2 so they don't have to use their own money to buy materials which some banks don't like, while Westpac and CBA is a bit more flexible.
     
  10. albanga

    albanga Well-Known Member

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    Thanks All
    Hopefully not required and my property sells but my wife is also looking to start work again so serviceability should be decent again.
     
  11. Fargo

    Fargo Well-Known Member

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    I found ST G so slow, and pathetic, I had too wait for cheques to be sent, FFS ! They where useless, by the time they supplied funds it was months after the where needed, so they weren't needed as other funding had to be used. A house can be built in 2 months, it takes ST G 6 months to make a money transfer ?.
     
  12. Harry Goyal

    Harry Goyal Member

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    Westpac and Commonwealth Bank Australia is a great option...

    Hope it helps
     
    Last edited by a moderator: 21st Mar, 2016
  13. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    I find that CBA and WBC have normal "joint and several liability " rules, ie you get halfthe rent, but the whole debt, and half the gearing

    ta
    rof
     
  14. melbgal

    melbgal Member

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    OP, I am in the same position as you and trying to find a lender who we can refinance with. I am currently with ANZ and we have a "joint and several liability" loan which impacts future borrowing capacity as it takes the full debt but half the income. They set it up in this way as the loan is secured by the property that is in joint names. At the time we just wanted to settle and we planned to refinance down the track.

    I just called ING and they said that they were able to do finance this in a way that one loan was in one persons name but guaranteed by the other party and vice versa.

    I don't know if there are better structures/options out there. Maybe other posters can share?
     
  15. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Where title of the security property is in 2 names then either:
    a) both must be on the loan, or
    b) one can go on the loan with the other giving a guarantee.
     
  16. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Note that a guarantee for the loan is treated the same as any other contingent liability by most lenders

    there are rare exceptions

    ta
    rolf
     
  17. melbgal

    melbgal Member

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    Thanks Rolf and Terry for your responses
     
  18. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    Who have you bought the property with, and why is it becoming an issue? While you will have to be borrower or guarantor on the ANZ loan refinance, if you want to continue buying in your own name there are lenders who are good for that as mentioned above - St G, AMP, ING and ME. Any loan that has two people on the title will have a joint liability as all title holders need to be on the loan in some capacity.
     
  19. melbgal

    melbgal Member

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    Hi Jess,

    These properties were bought years ago and have joint names on title and therefore the same names on the secured loans. We know that ANZ will take the full debt but only half the income. As Rolf said, even with a guarantor scenario, lenders will still take the liability. When I spoke to the guy at ING he said that was the case and also that they tend to be more conservative with lending.

    This hasn't impacted my ability to borrow but I am sure this is reducing the full amount that I am able to borrow from a serviceability perspective i.e. it is taking the full debt but only half the income... some options I have been considering as a worst case scenario (if I need to) are:
    - selling my share of the property and closing the joint loans
    - each owner taking full ownership of a property and the loans
    - both parties structuring our loans so that they are not secured by said properties, thus enabling us to take our joint names off the loans

    As mentioned, I haven't found my next property to buy so it is not causing me any problems yet, but if I want to buy something worth x but they will only lend me y (because of this situation) then I wanted to know if there were any other options I hadn't already considered.