I know a few banks are now offering your parents can put up the 20% deposit to same LMI.
Does this work as a line of credit for them ie the withdraw there money place it in my account and i pay 20% depoist, or does it work as i borrow the whole 100% in my name, but dont have to pay LMI as they have a 20% stake???
Can this be used only for investment purposes or only for the First Home Owners? As this seems a pretty good way to maximise your deductable debt by have 100% debt on the property? Otherwise what if you moved in recieved the FHOG and then moved out 6 months later and rented the property out? Would this technically be allowed, or would you have to refinance again??
Im guessing Terry or Richard will be the main help but any comments are apprecated…
Cheers Guys
Dave
There are many variations on the Family Guarantee style loan but in essence the loan is for 100% of the purchase price and the Guarantee provided by your parents would be limited to the difference between the total loan amount and 80% of purchase price (To allow for borrowing of your costs)
All that is required is that the Guarantor must demonstrate they can support the 20% + in the way of serviceability.
The facility is available for both owner occupiers and Investors.
Each lender has a slight variation on this theme.A new shared equity scheme is being released on 1 March 07 for owner occupiers with 100% lend all on the one property.
Interest is charge don 80% of the loan and repayment made on this component and no interest or repayments made on the 20% part. This increases your serviceability as you do not have to ever pay the 20% back as it is taken out of the equity on the eventual sale.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
Looking for life cover – We Guarantee to beat any quote you have in writing.Richard Taylor | Australia's leading private lender
i thought that it was basically something like that, its good it includes borrowing of costs, means the entire amount will the tax deductable debt… is the 20% secured by a mortgage on one of my parents current house, if thats the case what happens if they sell the property, is that when the debt is called in? Is this what we mean when you talk about x-claterising loans?
I assume that these loans coz be set up with a 100% offset account to reduce interest but not minimise deductable debt..
yeh i saw the super loan, i dont think it would suit me as i could see it would hamper future re financing and if i dont sell the house and want to pay them out, it could lead me paying a valuation price, i think id prefer to take the parents option before this one unless someone can prove why not…
thanks agian richard
G’day DaveA,
My wife and I used this type of loan (family equity) to purcahse out current unit with the help from ehr parents. It was really the only way we felt we were going to get in to the very expensive Sydney market. It takes a bit for the parents to get use to but it really is a great way for parents to be able to help their kids out without having to give a heap of cash.
We also had our solicitor draw up a basic contract so everyone was happy and we haven’t looked back. We are even looking at doing it again as it’s a way of avoiding mortage insurance also.
Good luck.
Beachesboy[biggrin]
Originally posted by Qlds007:Dave
All that is required is that the Guarantor must demonstrate they can support the 20% + in the way of serviceability.Sorry, i just want to clarify this up richard,
Is it serviceability, or does he need to provide some sort of equity as part of the guarantor. If its simple serviceability that is fine,however what happens if he provides equity (ie house) and then the house sells, do i need to refinance my loan or can he then transfer his portion to the new house???
Also will the lender only be qualified on 80% serviceability or 100% for this loan?
cheers
Dave
No the Bank will take a first mortgage equivalent to 20% (plus costs where borrowed) of the purchase price against your fathers property.
If he sells the property then you will need to either repay the loan or provide the Bank with altenative property security. The settlements will need to be simulataneous.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
New Shared Equity scheme has arrived – Email us for details.Richard Taylor | Australia's leading private lender
sorry richard just one more question regarding the equity part…
Say he buys a $500,000 house, uses $60,000 as equity for me for my deposit, what LVR can he have on his house with out LMI… can it be only 80% of first mortgage and then LMI
In this case, he would have 80% LVR of $400,000 on the property, minus the equity he has guarantored for me (60k), so he could borrow $340k without LMI? (Actual loan LVR of 68% but LVR of 1st mortgage of 80%)
is this right calculations??
sorry i just wanted to really clear this up so i have a good idea what im talking about when i explain it to him, cheers
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