Could someone in the know give me some advice on the following situation????
If I want to buy my own unit for say $265,000 but have no money, in fact there is a business debt of $30,000 @ 11.5%, is the following scenario feasible?Take out a Smartway low doc loan (RAMS) for $230,000 which requires a 15% deposit ($34,500) on said property. Repayments @ 7.93% are $361/week on the $230,000 and set up costs $5,345
To get the deposit for the loan I could do a reverse mortgage of $70,000 on mother’s property @ 8.47%. She is over 80 and her unit is worth about $380,000. This would provide deposit of $34,500, set up costs of $5345 and $30,000 to payout existing loan to get low doc loan of $230,000.
I still have to service this loan plus allow for rates,insurance and body corporate fees. My income from business is fluctuating but provides about $35,000p.a.
Can I do it or is there a better way?
N,Brown
N. Brown
The idea is not a bad one and I guess if it gets you into the property you want then it is a workable strategy.
You could probably do a little better on interest rate on the reverse mortage but as long as your mother is happy with the situation then that is fine. Make sure that you keep the loan for repayment of the business debt and the balance of the home loan proceeds separate for Tax purposes.
Remember only take on a liability that you can afford to repay irrespective on how you structure it.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
Looking for life cover – We Guarantee to beat any quote you have in writing.Richard Taylor | Australia's leading private lender
Thanks Richard for your reply. It may be better to rent than buy in this situation. Capital gain is attractive but repayments may outstrip and gain. Any thoughts out there?[blink]
N. Brown
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