My wife and I have agreed to purchase an IP with another couple as Tenants in Common – 25% each. (Rightly or wrongly!). We both (couples) have reasonable equity in our PPRs but our mortgages are with different lenders.
Could any of the Brokers out there advise how we would be best to structure this? I am a bit confused as I assume that the Bank financing the purchase would need the total of the new security.
Would it be best for each couple to raise equity from our existing lenders to fund the 20% deposit and costs (50/50) and approach a third lender, all 4 of use going on the title and the mortgage?
Any clarification or ideas as to what we could do are really appreciated.
Cheers
oldjeremyHi Oldjeremy
I think it would be a good idea for each couple to put in 10% of the deposit and borrow the 80% securred on this property only. You would not want to cross collateralise your own home when there is another party involved. Having a third lender would help distance things too.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi OJ
There are many ways to fund the project but yes the way in which you have described is probably the easiest.
Assume the purchase price is $300K then you would secure $240K against the property itself and the $60,000 plus lets assume costs of $20,000 ($80,000 / 2 = $40,000) would be raised individually against your own respective properties.
Just remember however that all income and liabilities will need to be disclosed on the new application form to the new lender so make sure the other couple are quiet happy with everyone knowing about each others personal affairs.
Your Mortgage Broker should be able to offer some discretion when it comes to the sharing of information and your privacy.
Richard Taylor | Australia's leading private lender
This has crossed my mind a couple of times, going into an IP with a friend/family member….more info would be appreciated…
Thanks for confirming what I thought.
Someone told me yesterday that it would be possible for each coupel to have a seperate mortgage for 50% of the debt. So, all 4 names would be on the title and ecah couple would have their own mortgage – but I just don't see how that can be as the lenders would require 100% of the security, surely?!
Thanks
oj
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