Me and Dad

Have done something similar recently with my partner in that I had had property before and she hadn’t. Structured the loan as you are suggesting and received the FHOG. Only thing to consider is that your Dad’s income is certainly taken into account, as is his liabilities.

Only real issue to consider is that if your Dad wishes to take out other finance, this loan will reduce his ability to service other loans and may limit him. You can refinance though, when your personal loan is paid out and get his name off the loan if necessary.

As long as both of you understand what you are getting in for, go for it!!

Spouses can generally be added to the loan even though they are not on title. In such cases, their incomes and liabilites will be taken into account.

Generally this cannot be done with third parties, including parents.

If you can’t borrow because of the personal loan, maybe your dad can assist you in paying out this loan or adding to your deposit so you need a smaller loan. He could secure a LOC against his own property if he hasn’t the cash.

Terryw
Discover Home Loans
Mortgage Broker
Click below to email me

CBA is the only lender that I know of that will take your Dad’s earnings. It’s called “Family Equity Home Loan”.

St George has a similar product but it cannot be used for serviceability support.

They cannot normally take income for third parties unless they are on the title of the property. The reason is because the third party has “no financial interest” in being on the loan. I.e. why act as applicant if you have no ownership. The bank needs to make sure all parties have a financial interest or they could be taken to Court.

Speak to CBA.

Cheers

Stu

Righto, the gist from above is that spouses can be included but third parties can’t.

Stuart, if you included a clause in the contract stating that DFM’s dad would recieve say 10% of the profit upon sale of the property, would this constitute having financial interest or does it have to be tied through risk. ie he can also lose if the property does not make money?? This also comes back to DFM’s initial question of a sweetener in the deal for his Dad.

Robert, I hope what I did wasn’t fraudulent. This approach was suggested by my broker whom I have alot of respect for, and was approved by a major bank and the controlling body for FHOG with all details disclosed, so hopefully I can avoid the can this time!!!

I am sorry to say that any way you look at it, it is fraudulent. The requirements state:

Eligibility requirements

FHOGS is available to people buying or building their first home and who meet the following eligibility criteria:

• applicant is a natural person and not a company or trust
• At least one applicant is a permanent resident or Australian citizen
• Each applicant must be at least 16 years of age
• All applicants and/or their spouse/de facto have not owned a residential property, jointly, separately or with some other person, in any State or Territory of Australia before 1 July 2000
• All applicants and/or their spouse/de facto have not owned on or after 1 July 2000 a residential property and occupied that property jointly, separately or with some other person in any State or Territory of Australia
• Each applicant has entered into a contract for the purchase of a home or signed a contract to build a home on or after 1 July 2000. In the case of an owner-builder, laying of the foundations commenced on or after 1 July 2000
• This is the first time an applicant and/or their spouse/de facto will receive a grant under the First Home Owner Grant Act 2000 in any State or Territory
• At least one applicant will occupy the home as their principal place of residence for a continuous period of six months, commencing within 12 months of settlement or construction of the home.

Each

Take particular note of points 3,4 and 7 above which are clearly stated on the FHOG application and you have to tick a box for each requirement and sign the document to verify you comply with the requirements.

Please remember that I am assuming that your “partner” is also your “spouse / de facto”. You could always sue your broker if you incur any financial loss for giving you advice that caused you to be fraudulent. A couple can only legally get the FHOG once regardless how the deal is structured.

Sorry to be the bearer of bad news.

Robert Bou-Hamdan
Mortgage Adviser

M: 0414 347 771
E: [email protected]
W: http://www.mortgagepackaging.com.au

Comments made are of a general nature and should not be construed as individual advice.

© 2004 Mortgage Packaging Pty Ltd

Thanks Robert,

Interesting, may go and have a chat with my broker and hear him out! Only comments are that I have not recieved the FHOG before but have had property before, same whichever way you look at it I guess with the checklist.

cheers

Jan

Hi was wondering if anyone can give me some advice. I currently live with my parents. I would like to borrow against there house to renovate and add on an extension. They are both retired and own the house outright. How much is it to add my name to the title as the bank says i have to do this to unlock the equity?  How do i go about adding my name to the title? Live in SA.