All Topics / Help Needed! / Can I use my property as security?

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  • Profile photo of marsmacmarsmac
    Participant
    @marsmac
    Join Date: 2009
    Post Count: 21
    April 30, 2009 - 2:26 am

    Hi everyone,

    Quick finance structure question.

    I have an investment property owned jointly with my mum.

    Can I use this property as security to purchase another investment property in my wife's or a trust's name?

    Thanks,

    Martin

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    April 30, 2009 - 5:08 am

    Yes you could, but …. it may be complicated as you and your mum will have to guarantee.

    A possibly better way would be to extra funds and lend to your wife or trust.

    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 Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024
    April 30, 2009 - 6:03 am

    Agreed messy to go forward the way you suggest.

    Lot easier solutions out there.

    Richard Taylor | Australia's leading private lender

    Profile photo of marsmacmarsmac
    Participant
    @marsmac
    Join Date: 2009
    Post Count: 21
    May 1, 2009 - 4:46 am

    Thanks for your replies.

    What other solutions can you suggest without possibly having to buyout my mum's 50% share (to avoid CGT issues)?

    I want to use the equity in my current investment property (whether held in my name or jointly) to purchase a second/third/forth investment property (in a trust structure or in my wife's name). You mentioned it was better not to secure the property or go as guarantor.

    Are there another solutions you can suggest besides buying out my mum's 50% share?

    Thanks,

    Martin

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024
    May 1, 2009 - 7:23 am

    Martin

    The cleanest way is for both of you to take out a loan secured against the jointly owned property to cover the deposit and the acqusition costs and then the partnership lends this to you/ your wife or the Trust at the same interest rate as you are being charged.

    The new entity takes out a standalone loan possibly with an alternative lender to purchase the new IP.

    Your mortgage broker should be able to give you some ideas and source a suitable lender for you.

    Hope this helps.

    Richard Taylor | Australia's leading private lender

    Profile photo of ducksterduckster
    Participant
    @duckster
    Join Date: 2004
    Post Count: 1,674
    May 2, 2009 - 11:39 pm

    You can get a line of credit loan in your name secured against the joint owed property.
    However the bank will require your mother to go to a solicitor to have the legal implications of this sort of arrangement and the risks involved to her explained . The solicitor then stamps the loan paper work and signs it.
    This is required by the banks to protect themselves, as borrowers have borrowed money against a security without the other person fully understanding the legal implications
    When things have gone pear shaped the other joint owner has simply claimed they had no understanding or knowledge of what they were signing and that it wasn't explained to them properly and the contract has become null and void and the bank loses money.

    I have done the above and spoken with the solicitor that is how I know about this situation.
     

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