Trusts are not legal entities so cannot borrow. It is the trustee that borrows, in their capacity as trustee.
Most banks will lend at normal rates and terms to trustees, whether they are individuals or companies. Residential loans in most cases.
If a company all the directors will need to give a personal guarantee.
If a trustee is borrowing the…[Read more]
i am no property lawyer, but there can be restriction covered by covenants on title and even laws which will restrict what can be done. Strata have the additional strata laws to contend with.
He should be seeking legal advice – from a lawyer, not a conveyancer.
I am not taking on new law clients atm as getting too many.
You can read the legislation at s 55 of the Duties Act NSW and surrounding sections:
The only way to avoid duty is to argue that the parents hold their share of the property on trust for you. It would be a resulting trust that arises because of the circumstances. We have helped a couple of people transfer title without duty – or nominal duty in situations like this in NSW.
If having the property mortgaged won’t necessarily…[Read more]
To get a loan you would need to qualify in terms of serviceability and would generally need to keep lvr to 80% so it will depend on the income of the borrowers plus the LVR.
Some lenders may also not like 2 properties on one title, but many do.
What I have seen happen with CBA is that someone might put in some money into the loan today and then think they can redraw it immediately or the next day, but they have to wait for the next monthly payment to come out first. I don’t have any CBA loans atm, so have not experienced this, others have not had any issues.
So after you split the loan…[Read more]
$5k pw is about $250k pa after tax. or about $400k before that
To get to this level you would need about $10mil in unencumbered assets yielding 4% after costs. That might mean 25 $500k properties all fully paid off.
That would be very difficult to do.
To make it easier
a) structure it to be more tax effective – so you might only need $300k pa…[Read more]
I would split it first then pay $799,900 into the loan and redraw. Otherwise it might automatically close.
You would have 2 loan splits.
Also watch out with CBA as there are a few quirks. Confirm with them that you have redraw and can immediately redraw the full amount.
risky I think
When you sell you eat up equity with the agent fees and then when you buy again you have stamp duty, conveyancing, etc So you might lose about 8% of the value.
You also have to consider the loan. Could you qualify for another loan again?
Think about the effect on the pension too – could you be over the assets test if you…[Read more]
You could leave it in other investments but you would soon need to liquidate those so you could have the cash ready for settlement. Lenders will want to know where the funds to complete are coming from.
I am a tax lawyer with a credit licence. with lots of experience in this area. You will need to apportion the interest if you do not split, furthermore, you will be paying back deductible debt with every deposit into the loan.
Splitting a loan means making one loan into 2 (or more).
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