Hi Guys,
hoping to gain some knowledge from your experiences.
here's my sitatution:
* im a first time property buyer. I've never bought a property for a home nor investment
* my gf has bought a home which we both live in currently. she has claimed the governments FHOG on this property
* we are both looking to buy an investment property as a joint venturei've done a little reading and spoken to some friends who have recently purchased investment prperties. the most notable example came from a friend who bought a house with her brother (brother and sister joint venture), and the brother claimed it as his home unfortunately i dont know too much about the details suffice to say from what i understand (and hoping you guys can clarify), the sister (who already owned a home) entered into an agreement whereby she provided the 10% deposit along with her brothers 10%, making up 20% and not needing mortgage insurance. she would then continue to contribute to her equal share of the mortgage repayments (50%) direct to her brother (not to bank).
so from a legal perspective, they both own 50% of the property (joint venture?), but the brother is the single home owner? and hence was still able to claim all the FHOG and reduction in stamp duty benefits.
does this sound plausible?
what im hoping to understand is legally what are the terms involved in this scenario. as it sounds like the best plan going forward for my girlfriend and I.
many thanks
BenHi Ben
Me thinks you are referring to a 3rd party mortgage where the Title owner and the loan names vary.
You wont find in the current climate that would be acceptable and to be honest the arrangement you have described would not have been acceptable anyway.
Nothing to stop someone gifting you a deposit though and you buying the property in your own name and then them registering a caveat or 2nd mortgage to protect their financial interest.
If i am way off on what you are trying to achieve come back to me.
Richard Taylor | Australia's leading private lender
Hi Richard,
thanks for the informative response.
with regards to your comment about 3rd party mortgages: "You wont find in the current climate that would be acceptable ", can you elaborate on why it wouldnt be acceptable? in what sense wouldnt it be?
im interested more in what you said about gifting the deposit and registering a caveat against it.
is there some information that you can refer to me?
would you be ble to put it in lamens terms how this works; perhaps even an example with our case
ie we're looking to buy $500k property
gf has an existing loan on her $400k property which she has held for two years
we're both prepared to put up $50k each to secure the $100k deposit to eliminate the need for mortgage insurance (can she redraw against her existing loan towards this deposit?)thanks
BenHi Ben
Simple reason it wouldnt be allowed is that without any financial interest in the security it would be very difficult for a lender to enforce your girlfriend to pay a part of the loan.
Each of you would treated as jointly severally liable for the entire debt yet only you would have anything to loose being the Title.
Now on a separate front nothing to stop your girlfriend gifting you $50K and then in turn you put in $100K deposit to the purchase in your sole name. You then draw up a mortgage document that states her $50K receives either interest or a percentage of the capital growth or any other formula you wish to use.
Remember if you are classifed as in a spousal relationship then you wont be able to claim the FHOG anyway.
Richard Taylor | Australia's leading private lender
this might sound like a silly question, but am i correct to assume that the $50k gift has to be funds that she has available ie can not be drawn from her existing mortgage? ie refinance her loan to withdraw $50k to give to me for this purpose?
thanks again
benq
Wouldn't refinance the loan merely take out a separate loan and therefore the interest and loan balance can be easily distinquished.
And Yes she can use her property as security and take a loan against to lend to you.
Richard Taylor | Australia's leading private lender
Richard,
but if she takes out a separate loan to be put towards the property, wouldnt that mean that she would be a co-owner and hence i wouldnt be eligible to the FHOG on this property (since she as an equity partner has already claimed the FHOG previously)?
and at most, i'd only benefit from 50% of total property price exemption from stamp dutyinstead i thought your suggestion of her gifting $50k (after remortgaging her current home to get the funds) to me then creating a caveat towards a 50% entitlement of the property thereafter would allow me to make the full FHOG claim and full 100% exemption on stamp duty for a property under $500k
do that make sense?
Perhaps another way to look at it would be to ask the question – "Am i so morally corrupt that i will do whatever it takes to get the FHOG rather than live an honourable honest life?"
The amount of money involved in the FHOG is insignificant in the long term, and dont forget it belongs to the Australian taxpayer not the tooth fairyAs long as benq and his partner are not in a spousal realtionship their is nothing immoral about claiming the FHOG.
Richard Taylor | Australia's leading private lender
thanks scedd. yes im australian too and i would imagine that would mean im eligible for the FHOG also
considering that sum + stamp duty concession for 500k property is about $23-24k, it is not insignificant at all when you also include the compounded interest saved over the life of the loanand no living with my gf does not consitute a spousal relationship
we just both want to invest , and whilst doing so smartly and legally.
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