Hi there,
I was hoping to get some advice. I’m going through a challenging time in my life where my wife wants a divorce.
We have two kids and a PPOR that I’ve put a lot of money and time into renovate. (When I met my wife I had two rentals which I sold to put $$ into this PPOR). The house is in a great coastal location, close to the school, shops and so on. It’s worth approx. $700k and we owe $380k.One option proposed is that we get the house valued and I pay her half of the profit (if we were to sell). This is my preferred option as the kids are settled in school and it’s a great house to bring them up in.
Are there any brokers that could offer advise in this area? My concern is that the banks may deem that I’m unable to service the loan (even though I pay for everything at the moment – eg, bills, mortgage etc)
These are the figures:
My income: $87,500 p/yr (gross)
PPOR: approx $700k
Debt: $380k
Two kids aged 3 & 4New loan required:
$380k + $155k pay out
Total: $535kIf anyone feels this is possible it would be great to hear from you. I really don’t want to lose both the house and time with my kids.
Thanks in advance,
Wayne
Hi Wayne, I’m sorry to hear about your situation. On face value it looks like you should be able to service a ~$535k loan but there are a few other factors involved as well that may impact things so it’s difficult to give a definite yes or no. Do you have any other debts or credit cards?
Kinnon Bell | Kinetic Funding
http://www.kineticfunding.com.au
Email Me | Phone MeMortgage & Personal Loan Broker based in Cairns and Melbourne but servicing clients Australia wide.
Hi Wayne
Get in touch with a decent broker to crunch the numbers for you to see what’s possible. Different lenders assess borrowing capacity differently – and a good broker will have access to most.
A lot will come down to whether you have other liabilities.
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]
Unfortunately this is a type of scenario that I (and I’m sure a lot of brokers) get to deal with quite often. Your situation may be tight but your ability to service any payout will largely depend on the lender. Have a chat with a broker who can look at your scenario and provide you with options. In the meantime be sure to keep your payment history clean, a single missed payment on a mortgage in recent history can unravel some of the simplest deals.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
Hi Guys,
Thanks for the advice. At this stage the only other liability I have is a credit card ($2k limit with $1k owing).
Corey – thanks for the tip re: clean payment history.
The one thing I’m unsure on is maintenance. I believe I can provide a good life for my boys and would be fighting for at a minimum, half or up to full custody. If things don’t work my way and for some reason I have to pay maintenance do the banks allow for this in their calculations? (Eg, If we choose to settle assets prior to a decision being reached on maintenance will banks ignore this or factor an approx figure in?)
Really appreciate the advice. Would hate to lose everything I’ve worked towards over the last decade…
Yep – banks will want to know how much maintenance you pay.
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 Jamie,
Thanks for the reply. Yes, but if I re-mortgaged now prior to any decision on child maintenance costs (i believe this would be a court process that occurs at a later date) then would this cost not be factored in or would the banks question why the title is going into one name and preempted possibility of maintenance fees?
Hope I’m making sense,
Thanks
Wayne
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This reply was modified 10 years, 2 months ago by
Waynel.
have you agreed upon a property split on this basis?
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
If you refinance before an official maintenance figure they will factor full expenses for your children being covered by yourself.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
Hi Terry,
No – no property agreement has been made at this stage.
Corey, thanks for the advise.
Kinetic – you mentioned that on face value (with the above figures) I should be able to qualify for a loan. Was this factoring in full expenses for the kids?
Thank you
Wayne
Hi Wayne, yes, it was based on you having 2 dependents. Maintenance was not factored in as that is an unknown at the moment as custody of the children has not been arranged. But, in any eventuality your children will always remain as dependents.
If I can second any of the above comments it’s to keep your repayment history clean. Some may suggest during a divorce that you should stop paying your commitments. If you want to give yourself the best chance possible at a loan, keep paying everything on time. Also, get in contact with one of the brokers and have an in depth discussion as it’s very difficult to say ‘yes’ or ‘no’ with the limited information given as there’s a lot of variables that come in to play.
Kinnon Bell | Kinetic Funding
http://www.kineticfunding.com.au
Email Me | Phone MeMortgage & Personal Loan Broker based in Cairns and Melbourne but servicing clients Australia wide.
Wayne, you will probably find the spouse will want more than you want to give. Even if sshe doesnt initially once friends start talking things change.
You will also need to consider the stamp duty implications. In most states you may be exempt on a transfer on breakdown of a marriage, but may need a court order or otherwise need to convince the commissioner of duties.
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
Kinetic – once again thanks for the reply. Yes, agree with the loan repayments – I will continue to pay the full mortgage as I have done in the past.
I think my next step is to get a valuation done to confirm the exact loan amount required. Would the best approach be to engage three real estate agents and take the average or pay a certified valuer?
Terry – yes, understand. Put it this way, I’ll be doing everything I can to ensure the best outcome for the kids.
Thanks guys
Wayne
Hi Again,
Additional to the above, does a guarantor help in regards to serviceability? Eg, if my parents went guarantor on the loan. (I highly doubt they will though was a thought that crossed my mind)
cheers
Wayne
Hi Again,
Additional to the above, does a guarantor help in regards to serviceability? Eg, if my parents went guarantor on the loan. (I highly doubt they will though was a thought that crossed my mind)
cheers
Wayne
Generally lenders won’t allow an income guarantor. Security guarantee is more common – using the parents property as security.
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
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This reply was modified 10 years, 2 months ago by
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