The bank shouldn’t have an issue. The security has increased in value, so the loan can increase. They don’t know about the units etc. That is an accounting entry.

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yes

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Yes, some banks allow parents property to be used as additional security. eg. St George has a family pledge option. Parents property can be used for a fixed amount – eg 20% only so if thngs go wrong, the bank can only claim up to this amount.

Parents do not need to provide any income for serviceability – just the security property.

When your property rises you can release the guarrantee and your parents property.

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Bit of a gamble sometimes I think. But i have known people who have done well.

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It is not ideal, butpossible to use the existing security as additional security for hte new property.

Just go to your exisitng lender and tell them you want to borrow to buy a new property. They will ask how much deposit you have, you tell them you have equity and will be using this property as well as the new purchase for security.

They then do a valution on both. If you have enough equity, and everything stacks up, then fine.

If not, you may have to go to a new lender, and take the existing loan over to them too.

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Hi Ptn

I am in Thailand atm, so cannot look thru my files. From memory he did not have a company as trustee, just himself. I will send Bankwest an email to see if anything has changed.

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Redwing, yes very true. I have seen one client with a hybrid trust, but the loan was in the wrong name – they didn’t know what they were doing, didn’t understand how the trust operated, and their broker didn’t either, so they got the loan in the wrong name. Don’t know how they ended up at tax time.

Also seen 3 clients who had purchased ppty 3 years prior using a unit trust and each holding a discretionary trust to hold their units. Would have been very expensive to set up. But the title of the property was in their individual names, not the corporate trustee. Their solicitor stuffed up, and they didn’t know, and had been lodging tax returns for 3 years as if the ppty was owned by the trust.

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Buy one under valued property for cash. Do it up a bit. after a few weeks mortgage this ppty, and repeat.

eg. $80,000 ppty. clean it up, values at $100K. get a loan of $80,000 and you still have all you money that you started with – less costs etc.

But i would be inclined, myself, to get a good high growth property.

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Must have been some sort of fraud or criminal behaviour involved?

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