Hello, I earn $120k a year and looking to buy an investment property to get into the property market.
My parents have offered to help but I have some questions as I don’t want to expose them.
If they give me 10% deposit can I borrow 90% or do they have to be on the loan?
Do they have to be on title and do they have to mortgage one of their properties?
The short answer is no they don’t need to be on the title or the loan. You would have to meet all of the lending criteria of course.
I am right near you if you would like to have an appointment to discuss your needs and goals?
I can be contacted through our website, www.mobilelender.com.au on my mobile 0435.474.498 or find me on Facebook
I look forward to being able to assist you on your property journey over the coming years
Congratulations on starting your journey into the property market.
As Scott has mentioned they do not need to be on the loan or title.
There are a few more details required to give you the correct answer. I am also located close to you.
Feel free to contact me if you would like to setup a no-obligation appointment to explore what options are available to you. I am a mobile lender so can come to you during the day or evenings 7 days a week.
It is quite ok for your parents to donate you the 10% deposit to buy an investment property and they do not have to be on the title. It may be best to have this acknowledged by a Deed of Gift or some other document if there are any other siblings. And assuming that they have the cash available, they will not have to mortgage one of their properties.
There are other criteria that you have to meet including your ability to repay the loan without undue difficulty . It may also be prudent to have a chat to your Accountant to ensure that this is a good tax effective financial strategy for you.
It is important that you have a clear understanding of how it all works so I would be happy to meet with you to explain all this to you at a mutually convenient time and place. Let me know what suits you.
Director (and former East Malvern resident!)
Bayside Finance Group
M 0418 547337
Have your parents gifted you the money, or is it a family loan? Do they expect it back in the future?
They may not need to be on the title, but this could be important information for both the bank/broker and any siblings you have. These types of gifts have been known to create conflict within family group when dealing with estates. If there is doubt, I'd recommend you speak to a lawyer to make sure everyone's interests are considered and fully documented.
From a tax perspective, it may be worth having a loan agreement in place, where you can claim interest paid to your parents (they will need to declare the interest income) to maximise the gearing benefits. Worth speaking to your accountant for this part.
Have you considered first home owners options as well? Check what the obligations are to qualify - might only have to live in the property for six months to qualify and help with reduced fees and/or get a grant. Check your options here.