Good morning all, long time no posty. Hope you’re all well :)
My partner and I are looking to buy a house with Granny Flat as FHO’s to save on Stamps (and potentially use the 6 Year Rule) but then turn the house part into an IP and live in the GF so we can pay extra into the mortgage/offset.
The one we’re looking at is $750k but we only have $40k deposit. Have asked three brokers if 95% LVR with IO for OO is still available but alas apparently it is no longer doable so we’re a bit stuck as we dont want to wait another year of saving as we’ve had enough of living with her crazy family!
The mum has offered to go guarantor for 80% LVR but not too fond of that as an option although it will save us more than $40k in LMI and interest payments. Question is, if she goes guarantor and something happens her or her house, what would happen our guarantored loan? If she defaults on her own home loan, if she dies etc… what could be the worst case scenario?
And if we do go guarantor route and release her after a year by refinancing upto 88% LVR, would the bank scrutinize our serviceability again? Partner is thinking of moving jobs so may be on a lesser wage after a year though told her serviceability could be the same or even better as we’d then have the $500/wk rental income contributing to it.
Would it be a good idea to go P&I just to get the loan and then 6 months later switch to IO? How easy would that be in this current climate?
Thanks in advance!
Her property would be secured by a mortgage and cross collateralised with your property for your loan. If she defaults on her loan it would affect you because the lender would potentially sell her house. They would be worried about the security for your loan so they may ask you to bring the LVR in line with their lending policies – such as 80% LVR. If she dies the estate would still be liable for the guarantee with the property still securing your loan. For the executor to sell it or change ownership there would be new guarantees needed or your loan paid down – or LVR to 80%, but you would have plenty of time to arrange this. keep in mind your property may have increased in value too.
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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