- I was after some advice regarding my situation.My fiance has an investment property, which she has subdivided. Her mother and her have split the cost of building a new townhouse on the subdivided lot (approximately $90,000 each). The title of the land is in my fiance's name.When we're married we're planning on moving into the new townhouse until we're in a position to buy another property. However, we would need to pay out my future mother-in-law for her contribution to the construction of the townhouse.
My questions are:How would I approach a bank for a loan/mortgage for the $90,000 amount needed to repay my fiance's mother when in essence the only security would be half of the newly constructed townhouse – and not the land (as the title is still in my fiance's name)?Would it be best to get a loan/mortgage from another bank to avoid cross-collateralisation? My fiance's mortgage is with Westpac, so I should approach other lenders?
Or alternately – would it be best to get a mortgage with Westpac as they already have the collateral of the existing land and property and half of the new townhouse (the half my fiance paid for).
Are there any legal/taxation issues I'd need to be aware of if I undertake any of the above scenarios (CGT, purchasing from a related party, buying at a fair market rate etc)?
Thanks in advance!Wow sounds to me like an absolute mine field and I can think of varying issues which might arise.
Does the land have separate title already as Westpac have an issue with multiple dwellings on the same Title.
Sounds like an equity release loan potentially and repaying your MIL maybe a problem.Has the construction started ?
I think I would starting from scratch and setting up the loan in manner which provides you flexibility as you dont want to find that you have sell merely to repay your mother in law as you are unable to fund the additional borrowing.
Richard Taylor | Australia's leading private lender
It's important to get the title particulars correct – you mentioned that the land was in your fiance's name before the subdivision – am I right in saying that's still the case now?
How did her mother contribute the $90,000? Was it a cash contribution or did she borrow it? If she borrowed it, was she joint on a loan, or did she use other equity in her own property?
Other things that would be of use to know are:
How many properties are there (depends on how you did the sub division)
Total value
Total debt on those properties.
The more info, the greater the chance of getting a solution.Does anyone know what sort of payback period I should get on my motherinlaw & what the ROI should be?
(Back to serious mode).
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