Sister buying half of my house

Any general questions you might have in regards to loans and finance.
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alexjong
Posts: 60
Joined: Wed Jun 17, 2009 5:21 pm

Sister buying half of my house

Post by alexjong »

Hi Otto,

I believe on the 14/05/2013 my interest free portion of my current home loan is up. I have been trying to sell my property, but have over capitalised, and with the current market, I don't believe I will be able to sell. So I have been exploring other options.

I have been talking to one of my sisters about buying half the house and both of us using it as an investment for the future when the housing market picks up again.

This will leave me needing a home loan for $180,000, for half of a house that I believe even in the worst valuation, will come in at $500,000. I have spent an additional $100,000 on the house since it was last valued, building a fully self contained unit for my Mother underneath. Even in this poor market I am positive of at least a $500,000 valuation, and have a mate who is a valuer in town, that is coming over in a couple of weeks to give me his opinion.

Probably would not need this to happen until March 2013, but I was hoping to know what a $180,000 loan would cost to pay off (principal and interest) weekly, so I can see if this is going to be a viable option for us.

No draw back facility needed, 25 year loan, and the best current interest rate you can find. I was hoping not to have to put in additional cash as a deposit, as the loan required is well under half the valuation of the house.

Like I said, just testing the water for now, so please don't go to too much trouble, just a weekly $ figure, so I can see if it a viable solution for us.

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Otto Dargan
Mortgage Specialist
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Re: Sister buying half of my house

Post by Otto Dargan »

Great to hear from you. Sorry to hear about the trouble with selling your house.

Change in ownership

FYI if your sister buys half of the house then she would need to pay stamp duty on the half that she buys. Your current home loan on the property would need to be refinanced and the new loan that replaces it will need to be in both of your names. In other words you can't really have separate loans, you are both liable for each others loans. If the valuation is fine then you shouldn't have to put in any extra money as a deposit.

However you can have separate loan accounts. This way you can keep track of who is paying what.

Personally I think it may be easier for you to just rent the property out yourself rather than sell half to your sister. Of course only if you can afford it.

Repayments

For a loan of $180,000 over 25 years at say 5.8% (average / good rate as of today's date) the repayments would be $1,137.84 / month. That is $262.58 a week.

We have a loan repayment calculator on our website that you can use to calculate repayments on other amounts if your situation changes. Or just ask me.
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

alexjong
Posts: 60
Joined: Wed Jun 17, 2009 5:21 pm

Re: Sister buying half of my house

Post by alexjong »

Thanks for the info mate.

So what would it cost /week to refinance our outstanding $380,000 loan, into a principal + interest loan over 25 years, if we decide to keep the house ourselves and rent it out?

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Otto Dargan
Mortgage Specialist
Posts: 7730
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
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Re: Sister buying half of my house

Post by Otto Dargan »

Your current home loan will automatically roll over to be 25 years P&I once the interest only period ends. So there is no need to change anything. However we can look at it and see if you can get a better deal at that time.

I don't like to refinance loans for no reason, there has to be a strong benefit for you before we would recommend changing lenders.
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

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