Hi All,
Any help here would be much appreciated.
The goal: My girlfriend and I are considering purchasing two properties. i.e. an apartment at around $250,000, AND a house at around $500k to $550k. We are currently financially independent but are considering getting married in the next year or so. We would ideally like to buy one each, but trying to work out if this is possible or financially viable.
Her taxable income for the last financial year was $41,000. He has no dependents, no debts, perfect credit history and minimal living expenses. She is an Australian resident but not a citizen.
Options being considered : We are trying to decide on the following (or any other) options:
OPTION 1) Buy each of these individually,
a) as they become available (noting that she has put me as a spouse on her recent tax return, in case that makes this option ineligible).
And possibly:
1b) Purchase the owner occupied (first one) as mine, and the investment property (second one) as hers.
OPTION 2) Become a spouse (get married) and
2a) Choose one house now and one in the coming months, and apply for either one loan amount of 750k to split over two properties;
OR
2b) Apply for two loan amounts (eg 500k + 750k) (one now, one in the coming months).
2c) claim the rent off the second house as extra income (not quite sure the pros and cons of this)
Main question 1: which of these would be the best option?
My understanding from speaking to the mortgage broker is that:
My understanding of Option 1 (my preferred option)
As of about 6-8 weeks ago, it was indicated to me that I should be able to obtain finance of about $390,000. In addition to my deposit, this should allow me to purchase a property of about $520,000. My understanding is that this was based on me not having a spouse – noting that my girlfriend and I are entirely financially independent. My financial at the current time is pretty similar to what it was then, so I will hope that OPTION A remains current – i.e. purchasing a home for around $500,000 independently (and obtaining the first home buyers’ stamp duty concession). I hate to say it, but I also wonder if this option would lead to easier separation of assetts if I do this before marriage and if the marriage doesn’t work out.
Question 2 My interpretation of my discussion with the mortgage broker is that purchasing individually for us each to receive the first owner-occupied home stamp duty concession would not work, though I am not entirely sure on the reason why, and am hoping someone can explain that to me.
My understanding of Option 2 (recommended to me by mortgage broker as explained below is that):
-Assuming OPTION 2 is chosen: It would make more financial sense to choose the first property as owner-occupied, and the second as investment (although I assume that this can be reversed in the future ?), primarily because we could get the stamp-duty concession on the first house and tax-breaks on the second.
- Our combined borrowing capacity would be higher than the sum of our 2 individual borrowing capacities (although I am not entirely sure how relevant this is given that the indicated individual borrowing capacities meet our needs
-It seems to me that we would getter tax concessions from having an owner occupied house and an investment propery TOGETHER (rather than one of them each).
I run my own business which is only 1.5 years in, so my mortgage broker says my only option would be a low-doc loan, which I presume means higher interest.
As soon as I get some clarification on this, I will decide on either OPTION 1 or 2.
Buy individually and have mortgages individually - lots more legal flexibility. Research into asset protection strategies involving this structure
A few years ago there were things like FHOGs / stamp duty exemptions, my wife and I took adv of that by buying individually - dunno if this is still available, research into any incentives you can capture twice instead of once
Also… maybe consider never getting married legally - just have the wedding as per normal but never marry. Then when you guys have kids she can get single mother benefits / rent assistance / FTB etc etc. Also you will have TWO PPORs and therefore benefit from TWO CGT exemptions instead of one. So good!
Actually the paragraph above is half sarcastic but totally possible - depends how far you wanna push it. If you totally trust your wife, legal marriage has no upsides and plenty of downsides. But of course… someone will get royally screwed if divorce