Pete

They would accept it for a trust deal, but wouldn't for a straight purchase as the person buying is deemed to be less attached to the house – since they haven't risked any of their own cash.

Easier with an eg.

say you had 2 properties purchased for $200,000 each and a 90% loan. Total security is $400,000, total loan is $360,000.

Now say the market has dropped 10% and you need to sell one property quickly because of financial trouble. You can only get $180,000 less costs maybe $174,000 in your hand.
You apply to the bank for a release of security and they say they will need to value the remaining security.
The value comes in at $180,000 so you must reduce the remaining loan to 90% of this figure = $162,000.

So from the original loan of $360,000 you minus the sale proceeds = $186,000. This is what you are left with when you pay all the money into the original loan. But the max loan size is $162,000 so you will need to come up with another $24,000 before the bank would release the security.

You were be hurting even more if this happened.

Nae

Depends on the state you are buying in. In Victoria, in the past, you needed written authorisation from the nominee before you entered into the contract. If you were going to nominate a trust or company, these needed to be set up prior to the signing of the contracts too. But things may have changed.

http://www.sro.vic.gov.au/sro/SROWebsite.nsf/rebates_fhog.htm#3

3. Are you eligible to receive the grant?

To be eligible to receive the grant, the following criteria must be satisfied:

• You and your spouse/partner must not have received a grant in any State or Territory of Australia.

• You and your spouse/partner must not have owned residential property, either jointly, separately or with some other person prior to 1 July 2000, in any State or Territory of Australia

• You and your spouse/partner must not have occupied for a continuous period of at least 6 months, a residential property in which either of you acquired a relevant interest on or after 1 July 2000 in any State or Territory of Australia.

http://www.austlii.edu.au/au/legis/tas/consol_act/da200193/s55.html

DUTIES ACT 2001 – SECT 55

55. Exemptions transfers to partners in a marriage or relationship

      (1) No duty is chargeable under this Chapter on a transfer, or an agreement for the sale or transfer, of dutiable property if it is proved to the satisfaction of the Commissioner that –

(a) as a result of the transfer or agreement, the whole of the property is or will be held by the parties to a marriage or significant relationship, or by caring partners, as joint tenants or as tenants in common in equal shares; and

(b) the dutiable property –

(i) is land that has erected on it a private dwelling house and was solely or principally used, as at the date of transfer, as the principal place of residence of the parties to the marriage or significant relationship, or of the caring partners; or

(ii) is vacant land and the parties to the marriage or significant relationship, or the caring partners, intend to use it as the site of a private dwelling house to be solely or principally used as their principal place of residence; or

(iii) is shares that confer an entitlement to exclusive possession of a company title dwelling that was solely or principally used, as at the date of transfer, as the principal place of residence of the parties to the marriage or significant relationship, or of the caring partners; and

(c) both the transferor and the transferee are the parties to the marriage or significant relationship, or are the caring partners, or one of them and no other person is a party to the transfer.

      (2) In this section –

"private dwelling house" includes a lot, within the meaning of the Strata Titles Act 1998, used as a place of residence.

These days lenders won't approve these sorts of deals if they know you are borrowing from the vendor. Maybe some of the smaller private type lenders would with a higher deposit, but none of the majors would.

ATO will want to know what the$200,000 borrowed was used for. If not for investment/business then you can't legally claim it. But whether you will be audited or not is a different matter. They may pick up the sudden increase in your deductions compared to last year and start asking questions.

Hi Harry

I don't think that is correct. I

n NSW:

• All applicants and/or their spouse/de facto have not owned a residential property, jointly, separately or with some other person, in any State or Territory of Australia before 1 July 2000.

• All applicants and/or their spouse/de facto have not owned on or after 1 July 2000 a residential property and occupied that property jointly, separately or with some other person in any State or Territory of Australia for a continuous period of at least six months

http://www.osr.nsw.gov.au/benefits/first_home/general/eligibility/