Hi Everyone
My husband and I are itching to get our next IP but we only have $15k in the bank. There are so many opportunities at the moment and we really don't want to miss out. Currently we have a 50% share in a unit in Freshwater NSW (bought for $511 000 and now worth approx $600-610k) and a house in Toowoomba (bought for $285k). We don't think the Toowoomba house will have changed much as it was bought last year and the prices have remained relatively flat. My brother owns the other half and it is a happy little joint venture however we don't want to enter any more joint ventures as we are liable for each other's debt, thereby reducing our borrowing capacity). Currently we owe $228k on the Freshie unit and have a fixed term interest only loan that ends November 2013. I think my brother's fixed term is up shortly.
I have been told by one mortgage broker that we can only use the equity in this place if we buy another property with my brother. Is this true? We are desperate to find a way to access the equity to put towards a property that is solely owned by us. Does anyone know of a way or a great mortgage broker who might? Also we have been told that we would have to use the same bank (Homeside) if we did use the equity?
Please help…this is killing me!
Peach
Hi Peach
Look hate to say the advice your mortgage broker has given you is incorrect.
You certainly dont need to be buying with your brother but you do need any new loan application taken out on a security that is jointly owned to be in all names. You say that you own an amount of $228K but i assume that the total loan on the property is actually $458K. If this is the case you are actually jointly and severally liable for the entire debt. You dont mentioned whether there is any loan on the Toowoomba properties.
There are a couple of lenders that wont reduce your borrowing capacity and allocate 50% of the rent and 50% of the liability to you despite the J & S position. You do not have to use Homeside on your new purchase.
So unless you can convince your brother to take out a similar loan (and they both be in all 3 names) i.e If you could access $100K in equity then you would take out 2 x $50K splits you wont be able to get to use any of the increased growth.
Must admit i have been known to work the odd bit of magic in my time however there are limits.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Richard,
Thanks for the reply…the help is much appreciated!
We own 50% of the Freshie Unit so around $300k. Of that we owe $228k. For the same property my brother owes $155k of his approx $300k portion.
We owe $276k on the Toowoomba place.
So if we did get 2 x $50k splits are you saying that we could go off and buy, for example, a property in QLD worth $300k and he could buy a completely different one in Sydney worth $300k? But then as the bank sees it we would have an additional $600k we are liable for if all of our names are on each loan?
This is one part of doing a joint venture that feels like it has come back to bite us!
Peach
Hi Peach
Yes whilst you may have purchased the property as Tenants in Common you will still be liable for his $155K.
In regards to going forward Yes you can certainly take out 2 new loans in 3 names of $50K each and use this as a deposit for a new IP.
As i said NOT every lender classifies you as being jointly and severally for the entire debt.
We do this regularly for clients.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Might be worthwhile getting a second opinion and having someone like Richard take a better look at the current structure and your options for moving forward.
As Richard mentioned above, not all lenders taken into account 100% of the debt when you hold the property with another party.
In example, we recently arranged finance for an IP for a client whos partner wasn't interested in investing. The lender we used only took 50% of the liabilities the married couple had – this enhanced the clients borrowing capacity and she was able to invest.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
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