Can I transfer my POR & associated loan to my partners name & go guarantor for her to open up my lending power for investment properties? If so, what are the costs involved & would she be eligible for the first home owners grant?
It is always good to see in-depth questions – well done. Shows you are looking for a way forward.
There are several on here who will add more of value than I can, but from my more limited knowledge, what you are proposing sounds like it would need some trade-offs to have it work. e.g. by going guarantor for her, I believe that may well add no advantage for you, as your "guarantor-ship" would count against you when applying for finance.
I will await with interest the replies from those more able to provide a useful answer to what is a good question !! On the surface, it seems like there may well be "other ways" to play what you are considering…. Let's see eh?
Perhaps consider providing a few more figures (value of PPOR, mortgage, etc. – even if only "rough") as this would likely help to make any answers clearer.
Hi Benny, Thank you for your response. I was starting to think I had asked a stupid question. I am looking to set up a trust to buy a RP & having my PPR in my name limits how much the trust can borrow. I can still borrow enough for the RP, but if i was to buy more RPs, then I would potentially have to start a new trust for each RP. At the end of the day I am looking for a cost effective way around this. My PPR is valued around $340,000 & owe $240,000.I have a borrowing power of $700,000+, depending on which bank I talk to.
Terryw, Thanks for your brutal honesty, not the answer I was hoping for… My understanding from "130 properties in 3.5 years" is that once you max out one trust you can then open another & borrow again the difference between your borrowing power & your personal debt. & no, I'm not in VIC, but NSW. If you have any suggestions for someone in my position they would be much appreciated… Squiresy.
god_of_money, so what you're telling me is I can't use this structure even if the trust is set up under a business name? If not, do you or anyone else have any ideas how I could achieve a similar result?
a business name is just that – a name. It doesn't matter what you call a trust as that doesn't change things. Where you are giving a personal guarantee this will limit your borrowing capacity as if you had that loan yourself.
If you have hit the serviceability wall you could possibly more forward by having others take the position of director of the trustee company and thereby you avoiding the guarantee – but they will need to.
Terry, Wont the bank want to look at the new director to see if they can service the previous loans of the company ?
and what happens if the past director of the company has given a personal guarantee. (as mostly standard these days). Are the absolved of their responsibilities if made not a director anymore.
Wilko, I was referring to setting up a new trust and trustee.
If the director of the existing trustee company changes this would probably be a breach of the loan agreement with the bank. Any personal guarantees would continue too – even if the person leaves the company.