Hello money bees!
My husband and I are finally able to get a toe in the housing market but only just…
We’ve saved $28k and don’t qualify for FHOG . We’re renting and happy to keep doing so for the meantime.We’re looking to buy a cheapee house, around the $225k mark, do a quick cosmetic reno & have it back on the market within 3-6 weeks to make a little profit hopefully $30-$70k? We want to do this repeatedly so at least 3-4 in a year.
I don’t earn an income and my husband who is in the highest tax bracket, will keep working at his job while me and his dad tackle the reno.Our accountant has said that ideally we would set up a discretionary trust and put the name of the trust on the ownership title and the loan in my husbands name BUT we’re trying to find out if anyone will do this at 95% and if not, IF there’s a way to have the loan in hubby’s name and the title 99% mine & 1% husbands (tenants in common?) for tax purposes…and if not, IF we can borrow via credit card to fund the rest of the deposit to get to 20% LVR? (we can’t borrow from family as we’re the ones trying to break the poverty cycle!)
Due to the nature of my husbands employment, we need to set up the appropriate structure if necessary and apply for a pre approval ASAP (within a week) so anyone with the know-so, please come forth!
And thank you, thank you, thank you in advance…
Couple of points worth mentioning:
1) For a purchase of around the $225K mark you will probably need at least 10% of the purchase price to cover the 5% deposit, mortgage insurance, stamp duty, application costs, mortgage reg & transfer. Given this you would need to be doing a very minor renovation.
2) Doing it repeatedly will cause you issues with both financiers as well as mortgage insurer (if required). Lenders will see your CRAA and assume you are doing this for income and the loans will be restructed to development loan criteria.
3) Not sure when you say "due to the nature of your husbands employment" this sounds like he is not in full time employment. This could cause a financing issue. Pre-approval wont get you over the hurdle if there is likely to be a change in his employment between now and when you sign a contract.
4) If you a Credit card limit that means you could draw upto 20% of the purchase price i am concerned that the limit is fairly high and this will go against you in Credit scoring.
Purchasing in a DFT at 95% with no other property assets will not be easy even if you have an existing relationship
with you current financier.Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Trusts are not legal entities, so the name on title will actually be the trustee and this is considered the trust owning the property.
Loans don't really matter for taxation it is the ownership that is important. If owned by X as trustee then it will be the trust that claims the interest and expenses, not X. You can have both names on the loan or guarantee the loan. Doesn't really matter which way.
I would think you should try one in your own names first and that way you could avoid tax if it was not your intention on doing it as a business.
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
Thanks guys.
My husband is a tunneller and today they are ‘breaking through’ (Airport link in Brisbane-Watch the news lol…).
He moves from tunnel to tunnel mostly in Australia and hasn’t been out of work since he began tunnelling 6 years ago but the first 6-9 months of any stretch of the tunnel, even if employed by the same parent company (Leighton/Theiss) involves 3 months with an agency and 6 months probation ‘on the books’….(politics about poaching…).
As they are breaking through today at his site, his payslips/shifts are all going to vary from the last 9 months as of next week and we only just finished probation with this job at the end of September!. He may even need to change sites again but hopefully not…
So while the job pays good, and we get a nice termination of employment pay out in between each tunnel, it stuffs us up with the banks needing you to not be on probation. Our serviceability is really good and we have no debts or bad credit…
Has anyone done a loan application for a client in this tunnelling/mining industry?Yes was aware of the tunnell progress as my friend is the leading Engineer on the site with Leightons.
Hate to say to you obtaining a pre-approval wont do you any good as soon as you sign a purchase contract even with a pre-approval the lender will ring your husbands employer to confirm his employment and will be presumably be told his work has been terminated.
Done many a deal for a client in the industry and it is still possible but lender / mortgage insurer i have in mind would want to sight your 3 months savings statements to ensure on such a good income you have building up your Asset base.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
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