I’m not sure if this is possible or legal, so I’m after some advice.
I have a property I’d like to sell in a rural area that has a low demand from buyers, it is valued at 185-200k. A contract fell through recently which I posted about here. LVR’s in the area tend to require LMI at >60% although some lenders may go to 80%.
I’ve spoken to the (still very interested) buyers who explained their situation in detail. Currently they have han IP in a different area worth about 450K and a mortgage of 200k whilst they rent the house they live in. They wish to purchase my property as their PPOR.
Can I offer them cash as a 2nd mortgage on their IP which the buyers could then use as a 20-40% cash deposit on my property though a different lender and avoid cross collateralisation & LMI whilst I held security against their IP ?
Would I require permission from the 1st mortgage holder of the IP to grant a 2nd mortgage to the buyers ?Yes you could ‘lend’ them the shortfall and you could secure your loan by a second mortgage. They would need permission from their lender to do this as title would change at settlement. It might be easier, for them, if you secured this against their other property – better for you against both of their properties.
Make sure you seek legal advice.
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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