All Topics / Legal & Accounting / The bank won’t add my name to the loan :(

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  • Profile photo of not_so_luckynot_so_lucky
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    @not_so_lucky
    Join Date: 2008
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    Hi all
    I hope I am posting this in the right section…
    My partner and I are planning on building a house on his block of land. However, the bank won’t let me have my name on the loan as I don’t have any assets and they want to protect me in case it doesn’t work out between my partner and I… that’s what they said anyway…
    We are engaged and planning to get married soon, but not just yet. We were thinking of adding my name to the title of land but at the moment we can’t afford to pay 8k for the transfer. (We wouldn’t have to pay the stamp duty if we’ve been living together for 3 years or more, but the problem is we haven’t been living together that long ?)
    We are not ready to get married either. So this makes things very difficult.
    The problem is that my name needs to be on the loan as my partner can’t borrow enough money for us to complete the house ?
    I was just wondering if it is possible for example for us to transfer 1% of his block of land on to me so we only have to pay stamp duty on 1% of the value. Will the bank then put my name on his loan as well?
    If anyone has any other suggestions I would be grateful if you could let me know ?
    Thanks
    A

    Profile photo of TerrywTerryw
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    @terryw
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    Most lenders would allow the name of a spouse to be on the loan even if they were not on title. Maybe you could try a different bank.

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

    Profile photo of not_so_luckynot_so_lucky
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    @not_so_lucky
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    Really?! That's excellent :)
    Maybe they were only saying that for "my protection". Thanks for that! :)

    Profile photo of not_so_luckynot_so_lucky
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    @not_so_lucky
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    spouse doesn't necessarily mean that the couple is married, right? :)

    Profile photo of Richard TaylorRichard Taylor
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    @qlds007
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    I am with Terry Not  so lucky.

    It is very simple if you cannot be on the loan with your current lender look at going elsewhere.

    Your mortgage broker should be able to handle this sort of enquiry as it happens on a regular basis.

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    0-40 Properties in a decade with an unencumbered value of over $35M. Email for a copy of my API article

    Profile photo of TerrywTerryw
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    @terryw
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    Spouse includes defacto as well as married

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of LinarLinar
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    @linar
    Join Date: 2004
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    I don't understand what the benefit is of having your name on the mortgage without being on the title.  Wouldn't that mean that you were liable for the mortgage without having any equity in the property?  I can understand this from the bank's perspective (another person to chase if the title holder can't pay the mortgage), but I don't see the benefit of being on the mortgage only.  Maybe one of the mortgage brokers can clarify that for me.

    If you want to be registered on the title in any capacity, whether it is 1% tenants in common or 50% joint tenants, there will need to be a transfer out of your partner's name and into both your names.  That will incur stamp duty fees.  It will not be any cheqper if you only have 1% of the title.  You will still pay stamp duty on the full amount of the property.  There is no way around this. 

    To my mind, having your name on the mortgage only without also being on the title will not change your situation.  You will still not have any assets but will have substantially more liabilities in the form of the mortgage.

    I think the bank is talking bollocks when they claim they are just trying to protect you.  They are just trying to protect themselves.  The bank doesn't care about your relationship with your partner (and why should they?)  There must be another reason they don't want to put your name on the mortgage.

    Speak to one of the brokers who replied to you.  They all know what they are doing.  They might have a way around your dilemma.  But, to my mind, I don't see that having your name on the mortgage without also being on the title will make the bank any more likely to lend to you.

    Cheers

    K

    Profile photo of LinarLinar
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    @linar
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    And something I forgot to put in my above post.  Double check your information about the title being transferred into your name as well without paying any stamp duty once you have been together for three years.  It may be a recent change to the legislation but I haven't heard of it before.

    The only ways I have ever heard of property being transferred into another person's name without having to pay stamp duty are in family law property settlements and when property is left in a will.

    But if I am wrong on that I am happy for someone to correct me.

    Cheers

    K

    Profile photo of YossarianYossarian
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    @yossarian
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    Linar wrote:
    I don't understand what the benefit is of having your name on the mortgage without being on the title.  Wouldn't that mean that you were liable for the mortgage without having any equity in the property? 

    Which is why a prudent bank that didn't want to get in to bunfight with a regulator if things go pearshaped wouldn't want you on the loan.

    Profile photo of not_so_luckynot_so_lucky
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    @not_so_lucky
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    Thank you all for the replies.
    By the way, the reason why we need my name on the loan is because we can borrow more money with my name on it. If it only goes on his name we won't have enough money to finish the house :(

    Profile photo of not_so_luckynot_so_lucky
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    @not_so_lucky
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    By the way, the bank in question is cba.

    Profile photo of Richard TaylorRichard Taylor
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    @qlds007
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    Not so lucky

    That says a lot if it is CBA. They are never the easiest to deal with in situations like that.

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    0-40 Properties in a decade with an unencumbered value of over $35M. Email for a copy of my API article

    Profile photo of Hybrid2007Hybrid2007
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    @hybrid2007
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    Hi not so lucky,

    I assumed most banks would allow this, after all there are a lot of investors who put titles in the name of for eg. the lower income earner or the higher one for negative gearing benefits or +ve cashflow tax reduduction.

    I have done this before (2 names on loan, 1 on title) and the only thing they asked (ING) is that we have signed declarations from an accountant and lawyer to say they explained the pros and cons to us. Maybe cba will consider this too?

    Profile photo of Richard TaylorRichard Taylor
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    @qlds007
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    Hate to say Hybrid very unlikely CBA will accept that as they just dont like 3rd part y loans

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    0-40 Properties in a decade with an unencumbered value of over $35M. Email for a copy of my API article

    Profile photo of Hybrid2007Hybrid2007
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    @hybrid2007
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    Hi Richard, are most of the banks like cba on this and have i been just lucky with ING?

    Profile photo of Richard TaylorRichard Taylor
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    @qlds007
    Join Date: 2003
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    Yes a lot of them especially now just understand.

    It is easier to say NO than listen.

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    0-40 Properties in a decade with an unencumbered value of over $35M. Email for a copy of my API article

    Profile photo of v8ghiav8ghia
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    @v8ghia
    Join Date: 2005
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    If you are married or in a so called defacto relationship, if you want to use both incomes (for servicing / higher borrowing amount purposes) this is pretty standard stuff. Most lenders will encourage it. Maybe something has got 'lost in translation' somewhere along the line, as in a relationship technicly asset are joint anyway. If you cant get any sense out of a simple request like this to your lender, go somewhere else. (or see if there is someone more experienced with that lender to talk too instead) All the best. 

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