Fiancee & I met with an accountant recently & meeting with the mortgage broker tomorrow night to apply for pre approval.
The accountant has suggested the following based on our buy & hold strategy & I was hoping someone could comment if we are on the right track;
- Title & loan to be 100% in my fiancees name if it is negatively geared as he earns more.
- Borrow the full purchase price plus costs & NOT to use any of our personal savings from our MISA account
- Loan to be I.O
- To keep the properties from being cross collaterised, Loan A = PPOR (joint names), Loan B = using equity from PPOR to pay for purchasing costs (in fiancees name) , Loan C = new loan to cover the cost of the house (in fiancees name). (Does it matter if loans A-C are with the same bank?)
I hope we are on the right track……
Hi there
It’s generally ok to have both loans with the same bank providing their not crossed.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Thank you Jamie M.
Is there an obvious way that I can tell if the mortgage broker is going to cross them?
That is generally ok. But if your spouse is on the highest tax rate what happens after a few years when the income exceeds the expenses?
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi Terryw – I looked forward to that day happening & when it does, then it would be more beneficial in my name.
What would you suggest?You must weigh up whether to save tax now or later. I suggest you do the sums.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
ok, will do & thank you Terryw.
tigermiger wrote:Thank you Jamie M.Is there an obvious way that I can tell if the mortgage broker is going to cross them?
If they stick to the structure you've outlined then they should remain uncrossed. The loan offer docs will also outline which securities are being used for the loan – it should only list the one property.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Hi Tiger
To keep the properties from being cross collaterised, Loan A = PPOR (joint names), Loan B = using equity from PPOR to pay for purchasing costs (in fiancees name) , Loan C = new loan to cover the cost of the house (in fiancees name). (Does it matter if loans A-C are with the same bank?)
Let's just clarify… you wish to borrow 100% + costs (no problem here). Loan A sounds okay. Loan B sounds okay. Loan C – if this is to be 100% of the purchase price, then it would be crossed with the PPOR. If it is to stand alone, then Loan B will have to include the 'deposit' to allow C to stand alone (or a loan D against PPOR). Does this make sense?
Good luck & Take Care
TTarek Baytieh wrote:Hi TigerTo keep the properties from being cross collaterised, Loan A = PPOR (joint names), Loan B = using equity from PPOR to pay for purchasing costs (in fiancees name) , Loan C = new loan to cover the cost of the house (in fiancees name). (Does it matter if loans A-C are with the same bank?)
Let's just clarify… you wish to borrow 100% + costs (no problem here). Loan A sounds okay. Loan B sounds okay. Loan C – if this is to be 100% of the purchase price, then it would be crossed with the PPOR. If it is to stand alone, then Loan B will have to include the 'deposit' to allow C to stand alone (or a loan D against PPOR). Does this make sense?
Good luck & Take Care
THi Tarek
I think you may have confused matters a tad. The structure the original poster suggested was fine.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Yes agree Jamie
The response confused me so hate too think what Tiger thought.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
I was totally lost with Tarek's response.
Thanks everyone & Jamie for your input.
Thanks Jamie… Please explain which part confused? Perhaps it was just the lack of terminology used…
Tige specified the need to 'Borrow the full purchase price plus costs & NOT to use any of our personal savings' yes?
AND
To keep the properties from being cross collaterised, Loan A = PPOR (joint names), Loan B = using equity from PPOR to pay for purchasing costs (in fiancees name) , Loan C = new loan to cover the cost of the house (in fiancees name).
To me this sounds as though she wishes to borrow 100% + costs (obviously). If loan C is to cover the purchase of the new property WITHOUT cross collateralising, then where is the 'Deposit' to do this coming from…? Loan B is stated as 'Purchasing costs' but no mention of 'Deposit'… I can only assume by your responses that 'Purchasing Costs' included 'Deposit'?
Structure is fine – not debating that – just clarifying where the actual 'Deposit' is accounted for.
Look forward to your thoughts!
TarekI think she meant Loan B to cover 20% deposit + purchasing costs. Just didn’t say the words, but appears pretty obvious.
Hi Tarek – Loan B will be covering the deposit.
As the I.P will be in fiancees name, does anyone have any ideas of how him & I can draw up a document saying that the property is mine too? I know a lawyer can do that, but I thought to save money we could write a letter and sign between ourselves.
Oh, and just in addition to this…
Loan A = PPOR (joint names), Loan B = using equity from PPOR to pay for purchasing costs (in fiancees name)
Loan B cannot be just in Fiancee's name if secured by PPOR that is in 'Joint' names… Loan B must also be in 'Joint' names unless Tige acts as a 'Security Guarantor' for Loan B…
Take Care
TarekI actually just received an email from the broker to complete forms to go as Guarantor for Loan B – thanks Tarek.
Thanks Midsomer – i'm known for being pedantic so was just making sure that while it may have appeared obvious, i was just clarifying that this in fact was the case – especially given the discussion around cross-collateralisation…
Thanks Tige – all good in that regard then!
In relation to the Agreement, i would always recommend formal Legal Advice in relation to these matters – a few hundred $$$ now could save you a lot of potential angst down the track.
Take Care
TarekVery true Tarek about the agreement – thanks.
tigermiger wrote:Hi Tarek – Loan B will be covering the deposit.
As the I.P will be in fiancees name, does anyone have any ideas of how him & I can draw up a document saying that the property is mine too? I know a lawyer can do that, but I thought to save money we could write a letter and sign between ourselves.
It won't be your's too. It will be his as he is buying it and borrowing for it. If you contribute to it then you may have an equitable interest.
If you draw up a docuent now to say that it is yours too then that will be a declaration of trust – watch out for paying stamp duty again. You would then have to declare the portions according to your beneficial ownership so he would lose the negative gearing benefits.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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