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The rent you get from Sydney property is low when compared to what you have to pay to buy the property.From an income viewpoint it is a poor investment compared to quality shares.The saving grace is capital gain,but you can experience a long period of no capital gain after a boom like we have just had.
Only one way to find out,ask the bank.If the shares themselves can be used as security without a margin loan then fine,but margin loans are designed to buy more shares & the interest will then be tax deductible.If you use the margin loan for other purposes the interest is not tax deductible.
He wants to buy out his ex wife’s share & doesn’t have the required deposit or income to support the mortgage.I thought i could co-sign on the mortgage & then he & his new girlfriend could live in it for a while then rent it out.He could find cheaper rental digs & his girlfriend might get rent assistance while he claims depreciation & interest etc tax deductions on the near-new house.His girlfriend has young kids & she wants to return to work when they get older which means they could probably afford to move back into the house then.For my own protection i would like a contract that requires the bank to foreclose rather than go after me for the repayments,although as you said it could affect my credit rating.Maybe my nephew & i could sign a deed that requires him to sell the property if he falls behind on the repayments.I could help with the repayments until it sells.
