Does the names on the mortgage have to be on the title of the house?
MORTGAGE - if I Use The Equity out of a House to Purchase a Property, Do I Need to Be on The Title of The New House
Keen Bargain Hunter on 28/08/2019 - 18:08
Comments
thank you for your contribution, where would I investigate what conditions are valid in this instance?
quick google;
https://www.yourmortgage.com.au/home-loan-guide/everything-y…
most big banks have more info about this type of lending; or ask your broker / lender for more info.
Valid? Whatever the bank asks for.
if I Use The Equity out of a House to Purchase a Property, Do I Need to Be on The Title of The New House
Are you leaning the money to someone else to buy the place?
If your Equity is used and they default, the banks come knocking on your door….. if you don't have the cash to pay them, they can sell your house to recoup their Equity
depends which direction the money is leaning
Whoops…..
*lending
Rriiigghhht…. any chance of an answer to the question?
I fail to see your reply to the question……
I'm waiting for more answers to answer the question.
Need more information on what you're trying to achieve.
I work for a bank - Under the Banking Code of Practice you would need to be receiving a substantial benefit from the loan. Eg. You may be able to do it if you are going to live in the new property. For more info look up BCoP and Substantial Benefit or read chapter 17 of https://www.ausbanking.org.au/wp-content/uploads/2019/06/Ban…
if you are taking out a mortgage under you and your partners name - but with your partner solely on the title to avoid land tax
Options under the current the banking code of practice which went into effect only recently are
- Guarantor - however this is can cost you a couple of hundred dollars to set up as you need a lawyer if you're going to do it properly
- Professional Mortgage - banks seem happy to do this if you're a professional!
I believe as long as they live there together it is considered a substantial benefit so is OK to both be on loan but one on title. No guarantor needed because the property owner is on the loan.
OK if its a bit more insightful -My partner and his ex wife own a freehold house - she currently resides in it with the kids ( pays associated costs (strata, rates, minimal) we are happy with this arrangement. We currently have a mortgage, but we want to use the equity as leverage to build a portfolio, of which is she is happy to assist. We don't want to change the title because it will revert back to her and kids if he dies. So could we use the leverage of the house, to acquire another property without her name being on the title of the new house?
if I have this right you want to use "partner and his ex wife" property as security for a new loan with yourself and your partner?…that's a tricky one…
…firstly, to use the equity in the house belonging to "partner and his ex wife" the "ex wife" would need to be a guarantor on the new loan (as she co-owns the security) but the new property title and new loan could be in just your partners name or joint with yourself.
Secondly, some things to consider
- ex wife will need to get independent legal and financial advice so that might be a good place to start to make sure she understands and is happy with everything.
- as a guarantor ex wife would have her borrowing power reduced if she ever wanted to borrow money as this new loan commitment would need to be factored in (if you default on the loan she would need to take over the repayments or risk losing her place of residence)
- If you borrow 100% plus stamp duty for the new property you would end up with a loan that is around 105-107% the value of the new property
- if ex wife wanted to remove herself as guarantor or if the "partner and his ex wife" property ever needed to be sold you would need to pay down the new loan to below 80% of the new property's value.
- as guarantor ex wife will be given all of your financial information including credit history.
- the bank would want to see what settlement agreement had been made to ensure nothing was owing to ex wife…so there is a lot to personally consider in this scenario, let alone what your bank is prepared to accept.
Just a thought, another option may be partner taking out a loan in just his name against "partner and his ex wife" property (using ex wife as a guarantor) and use this money as deposit for the new purchase. This will limit the risk to ex wife, separate yourself from ex wife, separate the new property from ex wife (she will not be a guarantor to the new property loan)…
hope this helps.
No, you just become the guarantor in that instance; There are conditions though.