This is my first post, and a new member I’m TOTALLY BLOWN AWAY with the sharing ethos you demonstrate in your forum communities. I love how willing you are to help each other out. [thumbsupanim]
My wife and I are looking into wrapping a property or building another “win – win” outcome with a single mother on Centrelink benefits. This impressively thrifty lady came to Australia from America as a child on her parent’s “Family Passport” in 1969. She’s lived in Australia ever since, she’s raised 3 kids who were born in Australia but she has never formally applied for Australian citizenship or Permanent Residency. Two questions:
1. How does she find out what her current residency status is?
2. Do Permanent Residents qualify for First Home Owners Grant?Cheers
Greg FPRs do qualify.
See
http://www.mortgagehunter.com.au/first-home-owner-grant.html
Follow the links to your state.
Cheers,
Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Hi Greg,
I wonder if this is really a win win situation.
Based on your description this lady is particularly thrifty and has done extremely well to raise three kids by herself. As such I wonder if she has some cash stashed away somewhere, which combined with her FHOG, gives her a deposit.
Even though she may be on Centrelink benefits I wonder if she has ever sat down and discussed the possibility of buying her own property. Something like ‘First Start (?)’ or similar may be possible.
As I understand it Centerlink people can get a loan if they meet the particular banks lending criteria.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Mortgage Hunter, Derek and Forum devotees
Thanks heaps. [thumbsupanim]
I logged onto Mortgage Hunter’s link re FHOG and noted Permanent Resident’s DO qualify. Our friend’s issue is that she doesn’t know whether she’s actually classified as a Permanent Resident or not (she’s never filled out any paperwork, but we assume since she’s on Centrelink benefits SOMETHING must be okay by the Australian government). Do you know of any websites we can research the qualifying conditions for Permanent Residency?
Derek, we’ve vaguely heard about “First Start”, but you clearly understand more about it than myself. Do you have any further information about it (eg., websites etc)?
You’re right about her savings ethic. She has $18,000 – $20,000 cash saved up (some in term deposits, and about $5,000 literally “in a sock”)
As my wife and I’ve never done a wrap before, but have 16 “buy and hold” properties (12 positively geared), frankly we’d prefer to go into a mini-business with her in 2 or 3 small +CF properties which would not affect her Centrelink income, but give her a much more attractive ROI. Her cash plus our lending ability plus an added equity percentage as a gift from us over and above the percentage of actual cash she puts up. If we saved and reinvested the +CF profits from these properties each week, we’d soon have enough cash saved up to put down deposits on other properties which she would also get further benefits from, all without jeopardising her Centrelink.
Any further input and comments from you guys would be much appreciated.
Cheers
Greg F
Hi Greg,
Ooops – Should have been ‘Home Start’ – some state governments have a home ownership scheme that may apply to your lady.
As I said somewhere else First Home for me was a long long time ago, and kids are not yet old enough to own house so the detail is but a ‘blip’ on my investment/home ownership horizon.
I am a little confused now – initially I thought you were wanting to wrap ‘her into a house’ (Is that a suitable description?) but now I sense you are wanting to create a business relationship with her joining you as a wrapper.
Once again I am on shakey ground but Centrelink have fairly rigorous (well I hope so as a taxpayer) checking processes which include both income and assets thresholds at levels determined by the ‘pension’ in question.
I wonder have these issues been fully explored and the possible ramifications been fully (and carefully) explained to the ‘lady’?
Sure, we (those on the forum) can appreciate the advantages of not being reliant on a ‘pension’ but here I suspect we are talking about someone from a very different generation who may fear being without the certainty of the meagre pension she is currently getting.
That’s about it for me – wrapping is another ‘blip’ not on my horizon.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Greg,
Ooops – Should have been ‘Home Start’ – some state governments have a home ownership scheme that may apply to your lady.
As I said somewhere else First Home for me was a long long time ago, and kids are not yet old enough to own house so the detail is but a ‘blip’ on my investment/home ownership horizon.
I am a little confused now – initially I thought you were wanting to wrap ‘her into a house’ (Is that a suitable description?) but now I sense you are wanting to create a business relationship with her joining you as a wrapper.
Once again I am on shakey ground but Centrelink have fairly rigorous (well I hope so as a taxpayer) checking processes which include both income and assets thresholds at levels determined by the ‘pension’ in question.
I wonder have these issues been fully explored and the possible ramifications been fully (and carefully) explained to the ‘lady’?
Sure, we (those on the forum) can appreciate the advantages of not being reliant on a ‘pension’ but here I suspect we are talking about someone from a very different generation who may fear being without the certainty of the meagre pension she is currently getting.
That’s about it for me – wrapping is another ‘blip’ not on my horizon.
Derek
[email protected]
************************************Hi Derek and ALL
Thanks for your comments on the impact of buying investment properties on our friend’s Single Mother’s Pension. We’ll research the limits and make sure we keep within them.
My wife and I have a genuine desire to help our friend. We made it clear that we would help her wherever we could, letting her choose either to:
1. Buy her own house OR
2. Go into a Joint Venture/mini-partnership with us buying an investment property, ploughing the +CF profits back in to save up for our second joint purchase (my wife and I already have 16 properties, so we’d keep investing in our own right as well as cutting this win-win deal).When my wife and I spoke with our friend she made it clear that, although she’d ultimately like to own her own house, she’s happy to wait and continue to enjoy her Rent Assistance until her financial position is stronger. In other words her first preference is to invest a small amount of her $20,000 and slowly build up her real estate equity, now she knows she can buy any number of IP’s and still qualify for the FHOG.
Can you tell me what sort of LEGAL STRUCTURE we should look at if we’re going to start by jointly buying our first joint purchase of a modest IP around $60,000 in WA.
Given that my wife and I would be providing the bulk of the money, it can’t be a 50/50 partnership (more like an 80/20 partnership), and I’m unclear whether “partnership” is the correct legal term/structure.
If we want to cut an 80/20 deal, given that we’re not yet ready with a Family Trust, nor do we have any experience with wrapping (that’ll come in time) what legal structure should we explore? What other problems do we need to guard against to ensure genuine win-win outcomes?
I hope I’m being clear enough with the question I need help on:
Q: What legal structure should we explore?Cheers
Greg F
CheersIn NSW, the loan for low-income/Centrlink earners is called the “Perfect Start Home Loan” and the actual scheme is called the “Government Guaranteed Loan Scheme”.
The government makes available funds for people such as those on Centrelink benefits, that would normally not qualify with traditional lenders. The loans are provided through the Commonwealth Bank.
Here’s some info about it:
Indicative Interest Rate: 7.07% variable (plus additional fees and charges). Applicants qualified at 9.07% {whatever THAT means}.
Deposit Required: Minimum 5%
NO lenders mortgage insurance is required.
Loan Size: $35,000 to $225,000
Purpose: To purchase an existing dwelling, strata title property, or construct a home on vacant land.
Term: Maximum 30 years.
Income: Maximum $75,000 total of all applicants and must be of a continuing nature. All sources can be considered, but family tax payments and child support can only be considered for children up to 12 years old.
Loan Repayments: To represent no more than 30% of gross income with total commitments including loan repayment not to exceed 36%.
FEES & CHARGES
* Share capital: $1 (to buy one share of Commonwealth Bank stock to become a shareholder)
* Application fee: $600
* Valuation fee: $220
* Inspection fee: $88 (construction loans only)
* Loan legal costs: Approx. $550 + disbursementsIn NSW, there’s also “First Home Plus Scheme”, which “provides exemptions or concessions on transfer stamp duty and mortgage duty for first home buyers and builders in NSW.”
I posted the link to this in the last couple of days… Um… See here: http://www.osr.nsw.gov.au/portal/page?_pageid=33,63384&_dad=portal&_schema=OSRPTLT
The location of the property she can buy, is set within the state she lives. Different states most likely would call these schemes different names – and – each state offers different benefits…
For instance, all the above info relates to NSW and the deal is pretty poor, after considering interest of 7.07% variable – and through the Commonwealth who charge all sorts of extra fees and who knows what kind of other penalties, such as early exit fees for paying the loan off early… Who knows what else THAT bank will charge.
In QLD however, they get a GREAT deal. I was just looking at this yesterday. They get a five year CAPPED interest rate. If the normal variable interest rate falls in that five years, ***so does theirs***. But if it rises ABOVE that capped rate that they signed up on, it won’t rise above the capped level (for the first five years) – then it reverts to the standard variable rate.
Also in QLD, if you are on a disability pension of some kind, you can also claim a special disability grant up to $10,000 to improve the kitchen/bathroom/entrance ramps – paid by the government.
I don’t know if the other states offer this, but I doubt it. The NSW version is a real rip off when compared to the QLD version. So much so, that I’ve considered moving to QLD myself.
(And don’t forget the $7,000 First Home Owners Grant.)
To find this information, just go to your state’s website – eg: http://www.nsw.gov.au and look for links that refer to buying a home. I did this yesterday too, and all the sites work pretty much the same.
As you can probably tell, I’m looking into all this myself. I’m not certain yet, as I’ll have to do up a spreadsheet on all the costs/benefits/drawbacks of the government scheme, compared to just applying for the loan through a mortgage broker… But I’ll bet the mortgage broker will be the better option. In other words – save a larger deposit and find a loan with a lower interest rate.
Hope this helped some…
Allan.
Oh – and I was going to say…
Different lenders are selected by the government to provide the scheme. One way to find out who provides it in your area is to phone the government housing department in your state and ask who provides the Government Guaranteed Loan Scheme in your area and ask for a contact number.
Allan.
Hi Just Allen, Derek and all
You guys are amazing. I really appreciate the quality of the information you’re all providing. I’ll pass on the Qld info to our friend, and let her choose what she wants to do from here.
I’m still hanging out for some comments about the type of legal structure we follow (as per my previous posting) if we continue to set up a “partnership” (probably the incorrect legal term) and start by investing in a modest IP
Cheers
Greg F
CheersGreg
Originally posted by Greg F:You’re right about her savings ethic. She has $18,000 – $20,000 cash saved up (some in term deposits, and about $5,000 literally “in a sock”)
I missed this before… For the next few months get her to save as much as she can – AND – instead of drawing her weekely groceries/bills out of her bank account, draw only part of it – and the rest take out of that $5,000 each week instead. I was thinking of doing this myself. Why? Well, when the lender looks at her bank account for the last few months, she can say: “I used to save quite well before…” (point at the two months before she did what I suggested above) and THEN point at the next few months bank records and say, “But this is when I made a more serious effort.”
First of all, they’re going to be wowed by her first two month’s savings ability – but then when they see the second… !!! [inlove]
Just make sure she draws say $100 out each week (or something) – so it’s not completely obvious she has an external source of income (the $5,000). (Just divide $5,000 by 4 months for example and draw that amount LESS each week than usual.)
Also – at least transfer her money into an online banking account – she’ll get close to 6% interest instead of getting nothing but smelly in that sock.
As my wife and I’ve never done a wrap before, but have 16 “buy and hold” properties (12 positively geared), frankly we’d prefer to go into a mini-business with her in 2 or 3 small +CF properties which would not affect her Centrelink income, but give her a much more attractive ROI. Her cash plus our lending ability plus an added equity percentage as a gift from us over and above the percentage of actual cash she puts up. If we saved and reinvested the +CF profits from these properties each week, we’d soon have enough cash saved up to put down deposits on other properties which she would also get further benefits from, all without jeopardising her Centrelink.Gee, can I be your friend too? : ) I’m on Disability Support Pension and my wife cares for me on a Carer’s Pension. Both my parents are remarried, and own their own homes outright. One of my wife’s parents is the same – and the other has a lot of equity in a valuable home in the tourist area of Narooma.
None of them will help us. In the meantime, I’ve proven to them we already save more each week NOW while PAYING RENT – than our loan repayments on our own home would be. (So we could repay a loan AND continue to rent. Yet they’re worried we couldn’t afford repayments, once we DIDN’T rent!?)
Some families have no idea what “family” means. I hope can teach something different to *our* kids.
Anyway, I digress…
I’m still hanging out for some comments about the type of legal structure we follow (as per my previous posting) if we continue to set up a “partnership” (probably the incorrect legal term) and start by investing in a modest IPI don’t know the answer – but I was going to suggest rewording it and posting again.
Allan.
Dear Greg,
Does ur friend has Medicare card? if she has, most likely she will definitely pass as an australian resident, citizen even maybe? As far as i know, if you have both driving licence and medicare card, you’re as much australian as any others (PR or Citizenship wise) NOt sure if Driving LIcence applies to senior citizen but i would assume so as i know once someone became a PR of Australia, he/she will have to have a valid australian licence as a so called identity card to identify them.
Back in Malaysia, we have this Identity Card which is separated from the Driving LIcence and has greater power compared to the driving licence, but here in Australia, there’s no Identity card as the driving licence itself is one, together with medicare card.
Hmm i think i’m going in circles, but hopefully u could follow what i’ve been saying..
Cheers,
Kev
Dear Greg,
oh by the way,
hmm i suppose you could try a Hybrid Trust where u could determine which that you and ur wife holds 80% of the trust and her 20% if you want a 80:20 ratio partnership and from ur 80% it became another sub trust (ur family trust) and her 20% will becomes her own family trust.
hope that make sense?
else if it’s just 3 properties and there’s no intention of expanding, u could always have some contracts written up highlighting the 80:20 profit breakdown ?
Do ask an accountant / lawyer on the legalities and all.. don’t quote me. mine was merely a suggestion, i’m not sure of it myself
my, with regards to FHOG, if you have a few IPs already and do not live in either of them, hence IPs not PPOR, do u still qualify for 1st home owner grant?
i was under the impression that ur first home is ok for receiving the FHOG if it’s ur PPOR but if you have ur first home as an IP and subsequently bought ur PPOR, that’s not considered a first home anymore as you would have owned a home already?
Could anyone confirm that?
thanks,
Kev
See
http://www.mortgagehunter.com.au/first-home-owner-grant.html
Follow the links to your state.
Cheers,
Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Greg F,
with regard to the structure, look at a Unit Trust. Avoid a simple partnership. Do a search on this and the Somersoft forum on the topic. You will find a lot to read!
TerryTerence McMahon
HomeWin
FinanceDear All
Such top quality info, and so much to digest!![cap]
I’ll speak to our friend, explain the ins and outs of all your replies, and keep you posted.
Once again, thanks BILLIONS!!
Cheers
Greg FGreg F,
Interesting post, i am aware of a friend who done this with buying his first home. And qualified for the first home owners grant, but he had to be on a pension (which is regarded as permanent). And i think he just applied for the loan thru his regular bank.
What’s sort of Centre link benefits, qualify for the scheme? How old are you friends children now? Is she on a pension or a regular Center Link payment andher children independant? I don’t believe you can get any loan thru any mortgage places or government organizations unless on a permanent Pension.
Also is this for Victoria? Please do inform of all the details, and much as you can, this topic is not covered very much in any forums.
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