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  • Profile photo of CorieCorie
    Participant
    @corie
    Join Date: 2009
    Post Count: 113

    I have a question….

    Hello everybody

    First of all, thanks for reading my post…..Im sure there are some smart people out there who will be able to answer my questions or steer me in the right direction.

    If I want to sell a property but the sale price is less that what I owe on the properties what happens with the outstanding amount? I know I will have to pay it back but do the banks want security for the amount remaining?

    Does it make a difference if the loan is under a trust name?

    Basically I want to look at selling a set of duplex units I bought a few years ago. Unfortunately I made a bad decision and now I have to face reality and make some tough decisions.
    I have had some evaluations done and each unit is valued about 60k less than what I paid so obviously if I was to sell both I am going to be 120K + in the red. I dont know if the situation in this town is going to get better or worse with time but my feeling is that it is going to get worse. I have over 650K tied up with these units and need to free up that money even if it means I will be paying for it after they are sold.

    So what are the implications with a situation like this? What are my options??

    Thanks

    Corie

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,190

    The bank won’t release the mortgage on the property unless what they are owed in full is paid. That will mean you can sell the property but won’t be able to settle unless you can either come up with the shortfall or convince them to lend you the money to pay them back.

    Do you own any other assets?

    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/

    Profile photo of CorieCorie
    Participant
    @corie
    Join Date: 2009
    Post Count: 113

    Hi Terry,

    thanks for the reply. Yeah thats sort of what i thought would be the case.

    I do have other assets although most of these properties already have equity borrowed against them. My PPR is a new purchase and I have only been it for 9 months so I cannot see any money available in that.

    If I sell the properties and just pay back what ever amount I receive for them it will still greatly reduce the amount of money I owe to the bank. I dont really know what else I can do? Even if I convince the bank to lend me the money to pay out the mortgage I still have to pay interest on the new amount and the interst rate would most likely be higher than the mortgage rate.

    Corie

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,190

    Not much else you can do.

    Seek some tax advice on generating a capital loss and the ability to keep claiming the interest on the loan after the property is gone.

    If your other properties are mortgaged to the same bank you have the risk of all monies clauses whereby you would have pledged these as security for all loans with the bank.

    Best to seek legal advice before doing anything.

    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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