Saving money is good, but it doesn’t increase borrowing capacity in itself.

Strangely though, paying down existing loans does increase borrowing capacity slightly because you will have a longer term on the new loan.

e.g. You have a 30 year loan with $25,000 years to go, you inherit $20,000. If you use it to pay a deposit, you might be able to borrow say $100,000. but if you were to repay that existing loan and then borrow more money you might be able to borrow $125,000 – because the new loan will have 30 years generally.

This should work well with owner occ loans, but will even work with IP loans. But there are many tax issues to consider before paying down a loan.

options may be to earn more money, or reduce your debt or a combination – if you have exhausted all avenues.

How do you pay for it if you cannot get a loan?
If you pay cash and then get a loan the interest could not be deductible.

Mortgagees have fiduciary duties to get the best possible price and so do executors. They are also more difficult to negotiate with so I think this will be a hard way to find an undermarket value property.

Accountants can only advise on the commonwealth tax aspects of trusts. You will need a lawyer for proper advice as Trusts are complex legal arrangements between beneficiaries and the trustee involving obligations over property. Trusts are not separate legal entities for example.

Borrowing capacity would be potentially more with a trust (could be less too!)
see https://www.propertyinvesting.com/topic/5031860-trust-strategies-to-increase-borrowing-capacity/

Perhaps you might have some recourse to insurance, although you did give him permission to be there so he is not trespassing.

Best to seek legal advice.

If you borrow more money the interest deductibility will depend on what the money is used for. if you build a shed on the same property the interest on this will generally be deductible if the property including the shed is rented out.
But if you borrow to recoup cash paid the interest will not be deductible.
if you do this you should split the loan into 2 portions. The shed cost can go on the same loan, but the personal recoupment on a separate loans.

How did you contract with them?

Shares of a jointly owned property are fixed at settlement. You will either own as tenants in common which could be 50/50 or any unequal % or as joint tenants which is considered 50/50 for tax purposes.

It is still possible to use strategy 3 – one joint owner selling their interest to the other joint owner. Must be the whole interest though for this to work. i.e. end up with one owning 100%

Not transferring title doesn’t mean that CGT doesn’t apply. In many cases it does
a) granting an easement
b) granting a life interest
c) declaring a trust
etc

Yes I could review legal documents for you. I testamentary trusts are a speciality of mine. Was it drawn up after legal advice? You can email me direct if you wish.