Hi all,
I have been pondering for the last few months if it would be sensible to buy back the other half of the house that i purchased 50/50 with a relative 5 years ago as it is difficult to use any equity in this property as it it is 2 names.
If i decide to purchase then i will have to outlay probably another $100k however i will have a loan of approx $130k on a property valued at $250k. The other option i guess is that we purchase another property in partnership using our joint equity! Not sure at this stage what would be the best method? [ears][ears]Im all ears!Any ideas from you invaluable forumites[whistle]
Sooner or later the man who wins is the man who thinks he can
Even if you buy out the other 1/2 you will still only have the same equity leverage and less servicability in the eyes of lenders.
On a personal note I would not continue with a partner as they can become very expensive passengers on your journey to financial security,often they are not able/willing to make the quick decisions necessary.
Unless they have/perform an equal/greater contribution Id rather be a sole trader.
Each to their own.
Johnjohn,
Thanks for the reply however the banks don’t let me use the equity currently that i have in this property as it is in 2 names. Therefore the repayments will increase YES however i will have another 140k equity avaliable[strum]
What do you rekon!Sooner or later the man who wins is the man who thinks he can
If sevicability of the new loan is no problem then your risk is minimal.
You will than gain 100% on any increase in property value.Servicability will be one of the issues your lender will evaluate on your next purchaese.
Deposit in the way of equity wont be a problem and if you can find properies either Positively or as close to neutrally Geared then servicability shouldnt be an issue—provided your on a decient wage—etc.
John
Hi Big ben,
I have been in this same senario and would never look back on my decision.
I could not apply for a loan while having 50% share in a property I had. It gets complicated. The second property can tie up the entire equity of the first property stopping the other 50% owner from also applying for another. Effectively your greedy and stopping the other business partner from being able to draw a loan. Two loans will not be able to be drawn on the house in two names.
Consequently I bought out my partner at a certified eval amount and adjusted the rent since it had been neglected. Little did I know that 100% ownership would benifit my loan application by providing a larger cash flow and increasing my borrow capacity. It may not make sense but it’s the way banks work.
The more you own the better the banks see it. Just go for it.
All the best.
Hi Lee?
thanks for the reply it seems that you have indeed been through this exact problem. The only other option that i have i guess is that we could buy another house in partnership using the equity in the joint house and i could keep that totally seperate from my other personal IP’s and treat it like a second side business? Can you forsee any problems with this ??[cigar]Sooner or later the man who wins is the man who thinks he can
Ben, you could alwasy talk to the relo, and see if they will agree to reborrow against the house up to 80%. Then you split the extra cash 50/50, and each do what you like with it – noting that your joint liability has also increased…..
Cheers
Mel
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