Sorry if this is all a bit confusing, but here goes: My hubby and I have property as follows: Home valued at $400,000, investment unit valued at $290,000. Our mortgage is $320,000. I have a disability which has progressed to the point where, after years of fighting, I have to give up my job.
Having paid taxes for 30 years, my doctor insists I apply for a disability support pension, which I am going to do, at least for a while (I am still hoping to find some suitable work but it seems almost impossible).
So we have elected to sell our investment unit. My 70 year old father and his 57 year old wife (who lost their home due to a dishonest business partner some years ago), would like to buy this unit, but cannot get finance due to my fathers age. He is a self-employed tradesman, very fit, earning good money and will able to work for at least another five years.
His wife, although also working, does not qualify for mortgage finance on her own. I want to help my dad, and my husband and I are willing to transfer the sale price of the unit (agreed at $275,000) to a sub-account on our portfolio loan, which the rent will then go into and my father and his wife will pay the balance.
We will sign legal documents to the effect that both the property and the debt are the legal responsibility of my father and his wife – but will this be enough evidence for Centrelink or will they still deem my husband and myself as owners of the unit and responsible for the debt?
I know we could sell privately buy my father has been wonderful to me – adapting our home and providing endless support through some bad times. I would like to see him have a home to retire in. But I can't do this if it means my husband and myself will be unable to live comfortably until I at least find (hopefully) an employer willing to take a chance on me again. My condition requires a lot of special accommodations and not many firms will make these type of allowances.
I have tried to talk to Centrelink and gotten many different responses. I admit that I have ended up in tears of frustration at times. so I thought maybe forum members had some advice or had experienced something similar?
Any advice, even something very small, would be such a help to me. Many thanks.
VJ.
HI VJ,
The big thing the bank looks at when it comes to applicants heading into retirement is an exist strategy (other then the usual checks such as servicing, etc). So the question for you is what is the exist strategy for you dad and his wife? Do they have adequate super? How do you propose that they pay the loan back? Also will this be used as an IP or a PPOR by your dad and his wife? If you are selling the property for $275,000 – how much deposit will they contribute to the sale?
Regards
Shahin
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
Hi Shahin, thank you so much for responding, I really am so distressed and your help is much appreciated.
My father and his wife have no super and $125,000 in savings. They will both be working – my dad for at least the next five years and his wife for at least 7 years, so they should be able – with the assistance of the rent coming in – to service the loan and indeed pay most of it off before retirement.
However, the bank will not lend to them due to my dad being 70. He is super fit and a veteran cycling athlete so he has the capacity to work, but banks do not take this into account.
Thanks again,
VJ.
You need to get specific advise and this can only be provided after ascertaining further information. We would need to do a servicing calculation to see if your dad's wife can repay the loan before retirement age. This would mean taking into consideration the salary and rental income amongst many things. Also its a little concerning that they have no super. What is the reason for this and how will they support themselves whilst paying off the loan?
Regards
Shahin
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
We will sign legal documents to the effect that both the property and the debt are the legal responsibility of my father and his wife – but will this be enough evidence for Centrelink or will they still deem my husband and myself as owners of the unit and responsible for the debt?
I think (and don't quote me on this) but for Centrelink the fact that the property is in your name on the title would mean that they will still consider it as yours. Also, if you sell it/make an income from it then it gets documented as part of your means test. Have you spoken with the social workers at Centrelink or just the counter staff? It also helps to get their responses in writing/email.
Does your mortgage agreement allow you to assign the debt?
I don't think this would be effective for social security purposes.
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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