All Topics / Finance / question for loan structuring

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  • Profile photo of viralkviralk
    Member
    @viralk
    Join Date: 2003
    Post Count: 65

    Hello everyone, me and my friend are forming a partnership to buy a property.

    Now we will buy property in the name of partnership but would like to get a loan in our individual name aganist the property which we are buying in the name of partnership.

    Is it possible to do that? Can bank would give finance in our individual name to buy property in the name of partnership? Any other solution to that.

    Please note the we will contribute 10% deposit and loan will be aganist the property we buy in the name of partnership.

    Please advice and help us out

    Viral Kanabar

    Profile photo of d_robb21d_robb21
    Participant
    @d_robb21
    Join Date: 2006
    Post Count: 101

    Hi Viral,

    This sounds like a question for your accountant, unfortunately a partnership is not a partnership like a trust is not a trust. There are many variations on these and each has their own lending and taxation implications.

    I’m currently involved in a series of joint ventures with family members, we’ve structured different projects differently based on what our goals are within that project. For example, our first project was set-up as 3 names on the title of the property, as far as the bank was concerned we were 3 individuals buying 1 property, we had our own partnership agreement which dictates that nature of our partnership, but the lending excludes the partnership for all intents and purposes.

    For another project that we’re running which is a short term flip, we’re utilising a discretionary trust so we can allocate funds to the lower income earners.

    Long story short, talk to your accountant, bank and/or mortgage broker and they’ll point you in the right direction.

    D.

    Profile photo of viralkviralk
    Member
    @viralk
    Join Date: 2003
    Post Count: 65

    Thanks D’. How about put partnership name on the title but get loan individually. Would bank lend in this case to individual? I think this should be my question. Sorry took bit long to get it right.
    Thanks, viral

    Viral Kanabar

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

    Viral

    Yes it is possible with a couple of lenders who will allow for the loan to be any of the names on the title however there is an underlying guarantee provided so that all parties are responsible for the entire loan.

    EG

    Property purchased in the name of ABC Pty Ltd with 2 Directors for $250K
    A 90% loan would be set up as follows:
    Loan # 1 in the name of Jack Smith for $112,500
    Loan # 2 in the name of Wendy Smith for $112,500

    In saying this however both clients are jointly and severably liable for the entire debt as Director of the Company.

    Cheers

    Richard Taylor
    Residential & Commercial Finance Broker.
    Licensed Financial Planner.
    Ph: 07 3720 1888
    [email protected]

    Richard Taylor | Australia's leading private lender

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

    I beleive a Partnership is not really a separate legal entity. Like a trust is not. So the title will have to be in the name of a company or an individual – or combinations.

    Terryw
    Discover Home Loans
    Parramatta
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    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

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