Hi All,
My brother, Dad and I are looking into buying an IP (perhaps $350k), doing some renovations and then renting it out for about 4 years. After this my Dad might want out (depends on when he will retire or not).
My questions are:
- Can we use equity in my Dads PPOR (value of $500k and $200k owing on the loan) as deposit for the IP thereby eliminating the need for the initial cash outlay of the deposit and hopefully get away without paying LMI.
- Whats the best way to tap into the Equity? LOC or Cross Coll?
- If we do use the equity in my Dad's property, can the IP still be in all three of our names as we will all split income and expenditure or will this become messy? (Would a trust be a good idea?)
- If at the end of 4 years, my Dad wants out, how easy will it be for my brother and I to buy my Dad out so that the equity in PPOR is redeemed? Would it be easier just to sell and start over?
Thanks in advance.
Cheers
Kurt
Answers
1. Yes – is dad still working?
2. LOC on dad's property
3. Yes – but consider if it should be. A trust could be a good idea, it depends
4. Easy, but messy. Stamp duty, conveyancing and new loans. Selling and starting over is one option – but there are others.
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 Terry,
Yes Dad is still working so hopefully that won't be problem.
Thanks for all your comments on the rest. Looks like there is hope!
Cheers
Kurt
You could have the loan as interest only and put extra cash into paying down the LOC that way it would be less messy.
If your dad wants out then you could just refinance the loan.
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