Hi All,
Hoping you can help me out! I have equity sitting in my IP that I want to access to purchase next property with my partner. Unfortunately the banks wont refinance me by myself (don’t meet there lending criteria anymore (my income went down since I got the loan) so the only way I can refinance it to access my equity so that me and my partner can buy our next IP is to add him to the loan(which he doesn’t like the sound of being on a loan and not having any ownership of the home) OR by refinancing the loan and putting him on the title.
I’ve heard I may have to pay stamp duty on this which would make the whole process pointless. Is this the case in NSW? Or is there a stamp duty exemption for Defacto/Married couples adding to title. know there might be for PPOR but not sure on IP.
Your help would be appreciated!
(if only my broker set my loan up right from the beginning I wouldn’t have this problem!!! – ahhhhhhhhhhhh)
Sammy
Sammy no stamp duty exemption on an IP in NSW and it actually gets worse.
If you added your partners name to the Title you may incur CGT on any increase in value.
You say your Bank have told you that the loan doesn’t service have you looked at refinancing rather than adding your name to the Title.
Certainly be a lot cheaper and you maybe surprised the difference in the amount you can access with another lender.
Did a loan for a forum member this week in a similar situation and we managed to squeeze out another 300k of borrowing compared to her original bank.
Cheers
Yours in Finance
0-40 properties in a decade. Ask me how.Richard Taylor | Australia's leading private lender
Hi Sammy
Agree with Richard – the simple solution might to be a refinance to another lender with a more generous method of calculating max borrowing.
Do you have any personal debt you can reduce/consolidate in order to improve your borrowing capacity?
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 Richard,
Did a loan for a forum member this week in a similar situation and we managed to squeeze out another 300k of borrowing compared to her original bank.
That is a very useful “aside” Richard. Amazing that a different lender could make such a large difference. Those little snippets are worth gold !!
Hi Sammy,
I hope the thoughts from Richard and Jamie are helping you to come to some conclusions. Certainly, when it comes to finance, these are the blokes to listen to,
BennyBenny you are so right.
This particular forum member had an investment loan with a 3rd party where his existing Bank was considering him jointly and severally liable for the entire debt however only taking into consideration 50% of the rental income.
Thankfully we have restructured the loan to a lender who considers 50% of the rent and 50% of the loan liability thus solving the problem.
Cheers
Yours in Finance
0-40 Properties in a decade. Ask me how.Richard Taylor | Australia's leading private lender
Stamp duty could be avoided if you were living their as the principal residence. For this to work your husband would need to buy 50% of your property from you at full market value. He could borrow to do so and claim the interest. Where the transfer is done for non consideration or undermarket value the full interest on the loan could not be claimed.
Because it is an IP CGT would apply – unless it was previously a main residence perhaps.
The easiest way to proceed would be to try a broker to get you a loan as is. Next easiest would be to simply add him to the loan but not the title. You may be able to take him off in a few years when your income situation improves or when servicing eases up (if).
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
Thank you all so much for your valuable information. You all provide such a wonderful service within these forums and i really would like to share my appreciation for all 3 of you, Jamie, Richard and Terry! When i read through the forums to increase my knowledge and learn i always see so many replies from you all and have definitely gained knowledge from you all previously! – thank you, truly it really is fantastic!
IP from the get go, so now i know that refinancing is the only option i will just have to keep trying to get refinanced. Terry – my partner is very concerned about putting his name on my loan without having any ownership and what would happen (worst case scenario) if i died/ or even dare i say it divorce (we are very happy so however unlikely it still a scneraio haha). I guess i could look down the legal road if necessary of getting a will made up that says he would get the home if i died, but hmmm divorce is a bit tricky.
If he is on the loan then he would have an equitable interest in the property. Even stronger interest if he is paying it too. This would be taken into account in any property settlement relating to divorce.
If you don’t have a will he will probably get all of your assets under the intestacy laws (this will depend on whether you have children from another relationship etc). You should still have a will though. Even if you have a will and decide to leave it to someone else he will have 2 or more grounds to contest the will – family provision and estoppel.
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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