Forums / Property Investing / Creative Investing / Strategy for loans in joint names or joint loans.

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  • Profile photo of Investor AlInvestor Al
    Member
    @investor-al
    Join Date: 2013
    Post Count: 4

    Hello everyone,

    it's my first post here so let's see how it goes.

    I have an investment property at the moment and that's organised. It's in a loan in my name.

    Presently we are renting. I'm looking to buy a PPR with my partner but I still wish to keep investing in future properties, which makes enough sense. The trouble I envisage is that once I get a loan with her for our PPR I may have trouble gaining access to more funds for future investment properties. For instance, my first IP was a 50/50 split with someone else and although I owned 50% of it, the loan made me accountable for 100% of it. This therefore was a big hurdle to overcome just to reach even equity wise. I ended up selling my share and buying my own IP.

    I have thought of creative ways around this, but I'm not sure which is an appropriate way. I'm thinking about buying the PPR in my name only and that may work better, but I may not be leant enough on just my income. I have thought about putting the PPR in my partner's name but on her income she probably won't be able to get a big enough loan. I've thought about going guarantor for her as I understand it, it reduces my total accountability a little bit. I've thought about having renters in our PPR to boost income and get that to count as income towards my next loan.

    Basically, I'm unsure of what I can do as I probably need my partners and my income to assist in getting a loan and then I'll have the 50/50 ownership but 100% loan problem. I've looked at tenants-in-common too but I'm not sure that there are answers there either.

    Any help would be appreciated,

    Al.

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,110

    Going guarantor won't help with servicing – initially. You will still be considered to have the loan. But at least this allows you to remove the guarantee a few years down the track if your spouse is able to service the loan at that point on her own.

    Consider the access of equity too.

    No real easy way to answer, you need to speak to a broker and work out borrowing capacities based on the above scenarios and see how serviceability will be affected.

    Consider also asset protection, succession on death (if in her name and you die…), stamp duty, further strategies..

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

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 11,992

    Hi Al

    Welcome to the forum and i hope you enjoy your time with us.

    Certainly it is one that needs some careful loan planning in order to achieve the required long term outcome.

    Whilst you are normally considered as jointly and severally liable for the entire loan remember there are some lenders who service the loan slightly differently and if you intend to expand your portfolio in the future these are the lenders who should be considering.

    Cheers

    Yours in Finance

     

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
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    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of Investor AlInvestor Al
    Member
    @investor-al
    Join Date: 2013
    Post Count: 4

    Thanks Terryw,

    now now let's not all hope I die too soon, but thanks for the advice :)

    Yeah, I'll have to see what a broker can do for me but I'm considering doing a subdivide now, and if I do so, that'll reduce the loan (or give me capital to rework) and it may be enough to grab onto another property.

    Profile photo of Investor AlInvestor Al
    Member
    @investor-al
    Join Date: 2013
    Post Count: 4

    Qlds007,

    I am a fan of the international exporter…

    That's the phrase, severally liable, sounds close to severely liable which amounts to much the same. I guess that's one thing I need to find out more on is how loans are serviced from the lenders' end. I guess that'll be my broker's job.

    Thanks.

    Profile photo of Investor AlInvestor Al
    Member
    @investor-al
    Join Date: 2013
    Post Count: 4

    Terry,

    I'm not sure if this is allowed, but what if my partner goes guarantor? Then the loan is in my name, sure if would tie her down from getting future loans, but with all the assets in my name it'd be easier for me to reuse equity.

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,110
    Investor Al wrote:
    Terry,

    I'm not sure if this is allowed, but what if my partner goes guarantor? Then the loan is in my name, sure if would tie her down from getting future loans, but with all the assets in my name it'd be easier for me to reuse equity.

    But, what is the point of that? Are you wanting to do this because you could not service on your own? If so how will you service more investment property on your own. And what happens if you get equity in the PPOR – how will you access that if you cannot service?

    This all depends on your borrowing capacities. It may be more beneficial, in some ways, of getting the PPOR in her name solely.

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

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

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