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Mortgage question


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#1 -Emissary-

Posted 12 January 2013 - 04:20 PM

My parents have asked me to take out a mortgage and upgrade their current house. It'll be a joint purchase but only under my name.

We are planning on selling the current house and I will further borrow $200k to buy the next house. My question is, would the bank see the money from my parent's sale of house to be a "deposit".

I will have no problem getting the $200k loan approved as on my income, my borrowing power is about $350k. It's just at the moment, I only have $16k sitting in the bank as $30k is tied up in my parents' business; therefore it looks like I'm cash poor when I actually have roughly 10% deposit even without the money from the sale of the house. I'm not sure if the bank will see the potential sale of my family home as a deposit as the house is under my dad's name.



#2 Pearson

Posted 12 January 2013 - 05:29 PM

Um, why are your parents asking you to do this? Why have you got so much money tied up in their business, and then they are asking you to support them financially to upgrade their house?
Are they willing to put your name on any of this? This will then show where your deposit etc are from, and where all the money is going that you earn.


#3 JRA

Posted 12 January 2013 - 09:08 PM

just be aware of the extra costs you may face if the house is in your name. If in Vic, you will probably be hit with landtax, which can hurt.

On the other part, sorry can't help

#4 Acidulous Osprey

Posted 12 January 2013 - 09:15 PM

There are complications with doing this.  There are tax implications--they are effectively gifting you a lot of money which can mean problems.  If they are close to pension age and expect to collect a pension, there are huge issues with them gifting you that huge deposit.



#5 -Emissary-

Posted 12 January 2013 - 11:55 PM

QUOTE
Um, why are your parents asking you to do this? Why have you got so much money tied up in their business, and then they are asking you to support them financially to upgrade their house?


Without delving into too much personal information, this isn't something that is outside the norm in our culture. I trust my mum and vice versa. I have been living with them for the past 5 years with DS and we have never had a problem. Most people on this forum wouldn't be able to do it, however, I come from a different background and we have a different family dynamic to what is the norm on EB.

I trust my mum to repay me the money that I have lent her. I basically have no reason to see how this could negatively affect me. I'm not financially supporting them. Their share will be roughly about 40% of the house. In my eyes, they have already paid their share and the rest is for me to pay give or take. There's more chances of me screwing them over then them screwing me over. Lucky for them, I love them with all my heart and wouldn't even think of it.  wink.gif

They are far (at least 15 years) from being able to get the pension so it won't be an issue. If I don't buy the house then they will have their own house in their own name which won't be counted towards their assets anyway. Their house isn't worth multi million dollars so we're not doing anything dodgy. It's more the fact that I have the earning power to borrow while they don't (they run their own small business..)

Balzac - I have thought about the capital gains tax implications of the monetary gift. Will look further into it. Thanks.

JRA - It'll be my main residence for a few years before they take back the mortgage/we come up with a new arrangment so I don't think I'll be hit with anything except stamp duty on the new property. They are happy for it to remain in my name and they will just live in it. Obviously, I have thought about issues such as if I partner up and then there's a chance of a divorce etc but I will deal with it then when it happens.

Edited by -Emissary-, 12 January 2013 - 11:57 PM.


#6 JRA

Posted 13 January 2013 - 06:32 AM

Emissary: that is great, I must admit I see no "issue" with you doing these things, you are family, as I said my only concern was tax. If you are living there there would be no stamp duty stuff.

Just be careful when/if you move out and buy somewhere else there may be CGT impact in the future. Good luck




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