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  • Profile photo of destined_for_millionsdestined_for_millions
    Member
    @destined_for_millions
    Join Date: 2004
    Post Count: 38

    I have recently spoken to a mortgage broker and found out that I am unable to borrow the funds needed to purchase a PPOR as I have a personal loan…
    I have spoken to my dad, whom i still live with regarding him being my ‘investing partner’ and he seems ok on the deal.. We would still need to properly invest the building first. I have a couple of questions
    1. Will i still be able to claim the FHOG if i don’t have his name on the house contract?(he owns his own hom)
    2. Will his full income be added to mine to lift my serviceability?
    3. Has anyone done anything like this before, I would be paying all costs myself, leaving his name on the loan to help me out.

    Does anyone have any hints on sweeteners to do this, such as offering a percentage of profits when the house is sold, etc?

    Any help would be great

    Profile photo of jhopperjhopper
    Member
    @jhopper
    Join Date: 2004
    Post Count: 278

    Have done something similar recently with my partner in that I had had property before and she hadn’t. Structured the loan as you are suggesting and received the FHOG. Only thing to consider is that your Dad’s income is certainly taken into account, as is his liabilities.

    Only real issue to consider is that if your Dad wishes to take out other finance, this loan will reduce his ability to service other loans and may limit him. You can refinance though, when your personal loan is paid out and get his name off the loan if necessary.

    As long as both of you understand what you are getting in for, go for it!!

    Profile photo of Robbie BRobbie B
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    @robbie-b
    Join Date: 2004
    Post Count: 2,493

    Jhopper, I think that is called fraud.

    In destined’s case though it is a little different. You are still eligible for the FHOG.

    Your dad’s full income can be used but I would structure the deal differently (if your dad has equity in his home) so the new loan and the new property will only be in your name (if he trusts you).

    How much equity (property value and amount owing) is in your dad’s property?

    Robert Bou-Hamdan
    Mortgage Adviser

    M: 0414 347 771
    E: [email protected]
    W: http://www.mortgagepackaging.com.au

    Comments made are of a general nature and should not be construed as individual advice.

    © 2004 Mortgage Packaging Pty Ltd

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,213

    Spouses can generally be added to the loan even though they are not on title. In such cases, their incomes and liabilites will be taken into account.

    Generally this cannot be done with third parties, including parents.

    If you can’t borrow because of the personal loan, maybe your dad can assist you in paying out this loan or adding to your deposit so you need a smaller loan. He could secure a LOC against his own property if he hasn’t the cash.

    Terryw
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    Profile photo of destined_for_millionsdestined_for_millions
    Member
    @destined_for_millions
    Join Date: 2004
    Post Count: 38

    Thanks for your input guys…

    Terryw, you said: “Spouses can generally be added to the loan even though they are not on title. In such cases, their incomes and liabilites will be taken into account.

    Generally this cannot be done with third parties, including parents.”

    Why is this the case? Why is it that it can’t be done with my dad? I will have my girlfriend living with me, but i don’t particularly want to get a loan with both our names on it… yet (we’re only 19)

    AND…. to make things worse, I just found out early this morning that the house i am loking at is open for inspection today. So, now we have to rush to make a decision on my finance options if the house is suitable/acceptable.

    Profile photo of Stuart WemyssStuart Wemyss
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    @stuart-wemyss
    Join Date: 2003
    Post Count: 598

    CBA is the only lender that I know of that will take your Dad’s earnings. It’s called “Family Equity Home Loan”.

    St George has a similar product but it cannot be used for serviceability support.

    They cannot normally take income for third parties unless they are on the title of the property. The reason is because the third party has “no financial interest” in being on the loan. I.e. why act as applicant if you have no ownership. The bank needs to make sure all parties have a financial interest or they could be taken to Court.

    Speak to CBA.

    Cheers

    Stu

    Profile photo of Robbie BRobbie B
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    @robbie-b
    Join Date: 2004
    Post Count: 2,493

    Destined,

    You really need to sit down with a mortgage adviser. You might not have any issues at all when you go through ALL the details with someone with some experience.

    A tip….

    Never rush into anything just because you fear you might lose the opportunity. You will find that another opportunity will almost always present itself and it will usually be a better one.

    Robert Bou-Hamdan
    Mortgage Adviser

    M: 0414 347 771
    E: [email protected]
    W: http://www.mortgagepackaging.com.au

    Comments made are of a general nature and should not be construed as individual advice.

    © 2004 Mortgage Packaging Pty Ltd

    Profile photo of jhopperjhopper
    Member
    @jhopper
    Join Date: 2004
    Post Count: 278

    Righto, the gist from above is that spouses can be included but third parties can’t.

    Stuart, if you included a clause in the contract stating that DFM’s dad would recieve say 10% of the profit upon sale of the property, would this constitute having financial interest or does it have to be tied through risk. ie he can also lose if the property does not make money?? This also comes back to DFM’s initial question of a sweetener in the deal for his Dad.

    Robert, I hope what I did wasn’t fraudulent. This approach was suggested by my broker whom I have alot of respect for, and was approved by a major bank and the controlling body for FHOG with all details disclosed, so hopefully I can avoid the can this time!!!

    Profile photo of Stuart WemyssStuart Wemyss
    Member
    @stuart-wemyss
    Join Date: 2003
    Post Count: 598
    Stuart, if you included a clause in the contract stating that DFM’s dad would recieve say 10% of the profit upon sale of the property, would this constitute having financial interest or does it have to be tied through risk. ie he can also lose if the property does not make money??

    I don’t think that would be enough. I would think the bank would want him on the title.

    Cheers

    Stu

    Profile photo of Robbie BRobbie B
    Member
    @robbie-b
    Join Date: 2004
    Post Count: 2,493
    Originally posted by jhopper:

    Robert, I hope what I did wasn’t fraudulent. This approach was suggested by my broker whom I have alot of respect for, and was approved by a major bank and the controlling body for FHOG with all details disclosed, so hopefully I can avoid the can this time!!!

    I am sorry to say that any way you look at it, it is fraudulent. The requirements state:

    Eligibility requirements

    FHOGS is available to people buying or building their first home and who meet the following eligibility criteria:

    • applicant is a natural person and not a company or trust
    • At least one applicant is a permanent resident or Australian citizen
    • Each applicant must be at least 16 years of age
    • 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
    • Each applicant has entered into a contract for the purchase of a home or signed a contract to build a home on or after 1 July 2000. In the case of an owner-builder, laying of the foundations commenced on or after 1 July 2000
    • This is the first time an applicant and/or their spouse/de facto will receive a grant under the First Home Owner Grant Act 2000 in any State or Territory
    • At least one applicant will occupy the home as their principal place of residence for a continuous period of six months, commencing within 12 months of settlement or construction of the home.

    Each

    Take particular note of points 3,4 and 7 above which are clearly stated on the FHOG application and you have to tick a box for each requirement and sign the document to verify you comply with the requirements.

    Please remember that I am assuming that your “partner” is also your “spouse / de facto”. You could always sue your broker if you incur any financial loss for giving you advice that caused you to be fraudulent. A couple can only legally get the FHOG once regardless how the deal is structured.

    Sorry to be the bearer of bad news.

    Robert Bou-Hamdan
    Mortgage Adviser

    M: 0414 347 771
    E: [email protected]
    W: http://www.mortgagepackaging.com.au

    Comments made are of a general nature and should not be construed as individual advice.

    © 2004 Mortgage Packaging Pty Ltd

    Profile photo of destined_for_millionsdestined_for_millions
    Member
    @destined_for_millions
    Join Date: 2004
    Post Count: 38

    Ok…
    So you’re saying that if my dad was on the loan application, I couldn’t get the FHOG? Are we still able to increase my serviceability if we did not disclose with the bank that he was a ‘silent partner’? i.e We make it look as though he is a 50/50 partner but really myself and my girlfriend are paying the loan repayments and he is paying nothing?

    I’m just trying to get my foot in the door as soon as i possibly can. I don’t want to ‘work for the man’ all of my life.

    Profile photo of jhopperjhopper
    Member
    @jhopper
    Join Date: 2004
    Post Count: 278

    Thanks Robert,

    Interesting, may go and have a chat with my broker and hear him out! Only comments are that I have not recieved the FHOG before but have had property before, same whichever way you look at it I guess with the checklist.

    cheers

    Jan

    Profile photo of Robbie BRobbie B
    Member
    @robbie-b
    Join Date: 2004
    Post Count: 2,493

    Jan,

    There is a technicality that you may have got through on.

    If you only owned a property after 1 July 2000 and DID NOT live in it, then you are still eligible. If you owned prior to 1 July 2000, all bets are off.

    Destined,

    HOW MUCH IS YOUR DAD’S PROPERTY WORTH AND IS THERE A DEBT ON IT?

    You really need to give ALL the details to get the right answer. Any answers you have received here so far can not be accurate because your details are unknown. Talk to a mortgage adviser and tell them everything so they can work out the best option for you.

    There is nearly always something you can do.

    Robert Bou-Hamdan
    Mortgage Adviser

    M: 0414 347 771
    E: [email protected]
    W: http://www.mortgagepackaging.com.au

    FREE Finance-Related Newsletter: See – http://www.mortgagepackaging.com.au/index_files/newsletter.htm

    Comments made are of a general nature and should not be construed as individual advice.

    © 2004 Mortgage Packaging Pty Ltd

    Profile photo of Elocin2102Elocin2102
    Member
    @elocin2102
    Join Date: 2011
    Post Count: 1

    Hi was wondering if anyone can give me some advice. I currently live with my parents. I would like to borrow against there house to renovate and add on an extension. They are both retired and own the house outright. How much is it to add my name to the title as the bank says i have to do this to unlock the equity?  How do i go about adding my name to the title? Live in SA.

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Many considerations before you just go ahead and do so.

    I would probably consult your mortgage broker or Solicitor as you need to work out Stamp Duty, possible loss of CGT, restrictive borrowing capacity going forward, potential loss of future pension entitlements etc etc.

    Cheers

    Yours in Finance

    Richard Taylor | Australia's leading private lender

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