Hi all, first up I just want to say how valuable this site and forum is. I stumbled across this by accident and couldn’t help but signed up immediately :)
I was hoping someone could shed some light on my situation below…
I recently purchased a home on a 10/90 contract and construction is due to commence soon. I went in the contract with my partner at the time, but now we are separated. We have agreed that she will no longer participate with the purchase of the property and she is happy to be removed from the contract.
1) how can this be done and are there any consequences?
Apart from the above, the other situation is that because I will be going into this now alone (assuming that the above is all sorted), I will have to apply for the loan on my own. The issue I am concern is how it will impact my borrowing capacity for the house as it went from dual income to a single income.
2) if I am unable to obtain a loan directly, is there any way of using a guarantor to assist? or if there are other ways of going about at this?
Background: The property is worth $420k, and 10% has been put down already. Personal Income: $58k pa + comms.
As this is to be my first property, I already have 101 things going through my mind, but the above situation has thrown another spanner into the works…
Thanks in advance. Appreciate any ideas and suggestions.
Hi Ky
Firstly welcome the forum and I hope you enjoy your time with us.
Sorry to hear about the relationship split there is a never a good time for this occur.
When you say you have recently signed a contract to build i am assuming that you already own the land ?
If this is the case then i am assuming that both of your names are on the Title and changing this will have implications.
If not then then certainly subject to serviceability it is possible but further data would be required to provide a structured answer.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Richard, thank you for your reply.
It is a one part contract where it is a house and land package. I have yet to receive a transfer of title or something similar… Not sure if this is what you meant.
At the time of singing, it was under both of our names.
Hi there
Sorry to hear about your predicament.
You won’t be able to use a guarantor to assist with servicing (borrowing capacity) – you can only use them to put up collateral (cover your deposit).
If you’re locked into the purchase (you’ve already exchanged contracts) and are required to settle, then perhaps consider purchasing it as an IP. The rent it will receive will assist with your borrowing capacity – especially if you live at home rent/board free (I don’t know if you do or not). This may have implications on Govt. concessions though (if applicable).
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]
As Jamie has suggested, if serviceability is tight, purchasing this as an investment property may get this over the line. If you haven’t already got a broker, I’d suggest contacting one, as they will be run through the plethora of scenarios and lender combinations which can be used to meet your needs.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
Hi all, thank you for your replies.
Thank you Jamie for clearing that up for me – I was under the impression that I will be able to use guarantor… In saying that, does that mean I can use them to put up another 10%, so taking my total deposit to 20% and avoid the LMI and also reduce the amount I need to borrow which may tie me over…?
I will give definitely give some thought about making it into an IP if things dont stack up – better to lose the FHOG than the whole deposit…!
Professional advice is definitely my next steps :)
Thank you Jamie for clearing that up for me – I was under the impression that I will be able to use guarantor… In saying that, does that mean I can use them to put up another 10%, so taking my total deposit to 20% and avoid the LMI and also reduce the amount I need to borrow which may tie me over…?
No probs.
It will reduce LMI but it won’t effect the amount you need to borrow. The guarantor puts their property up as collateral – but you still need to borrow however much you need to settle the purchase.
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]
Hi Ky
No you won’t be able to use a guarantor to increase your borrowing.
Varying the Contract may have other implications in regards to Stamp duty get some legal advice before changing the Contract.
Ran some quick numbers and there are a couple of lending options i can think of which might work.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Thank you Richard. I am in the midst of getting some professional advice. I appreciate yours and the other members input and will keep the above in mind.
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