Hi I am looking for some advise about a property my sister and i purchased as joint tenants about four years ago. She had recently moved away leaving the house and repayments to myself which i can only just afford. I have tried to get the title and mortgage put into my name alone but the bank says it will cost me $10k alone for new mortgage insurance which is money i don't have as i already have $10k of debt. I do want to stay in the property game. Would it be worth selling then downsizing? Any help would be great Troy
Troy, To change title may involve stamp duty for your sister selling/releasing her 50% share to you. In terms of financing this, if you were both on the mortgage, it may be possible for the lender to release your sister from the mortgage if you can show you can service the loan yourself or you could simply continue to pay the mortgage if she is happy to stay on the mortgage. I would suggest if you do, you come up with a legal agreement with your sister to provide you protection for doing this. If you stay with the existing lender, there should be no issue with mortgage insurance or much additional cost. If you are looking at changing lenders, depending on the valuation of the property and the loan amount, there could be a mortgage insurance issue if the LVR is > 80%. If this is the case, LMI is added onto the loan itself so there is no need to be able to meet the one off cost for LMI, it is paid back over time with the loan itself. Greg
Perhaps wait for some capital growth. With JT the asset will pass to the surivior on death of 1 so this may not be ideal from an estate planning perspective (unless you outlive your sister perhaps).
Thankyou Greg for this advise. Any idea what the cost of stamp duty usually is? I think i will shop around for a new lender as this one seems to be stuffing me around.
Troy, Stamp duty is per state and property value. If you let me know what state and the approximate property value, I can give you an indication. If you need any help with lender selection and servicing, let me know. Greg
Hi Greg The approx value of my property is $330000 and the property is situated in queensland. Would it be advisable to get my solicitor to formally ask the bank if they can remove my sister from the mortgage with proof i have been servicing the loan? Troy
Banks won't do that. You have to be able to demonstrate you can service the loan and this will require basically a new application. Duty would be payable on the share transferred. ie $165,000 if you own 50/50.
Troy, On the basis of 50% dutiable, it will be $1,650 plus you may need to pay for a transfer fee and new mortgage registration? I agree with Terry, it will most likely be a new loan application. Sometimes it is easier to refinance with another lender but not if the property value has dropped and LMI will be involved. You could simply wait until the property market has strengthened and then look to the transfer if there is no immediate urgency. Greg
Silly question, but why can't your sister continue to service her side of the loan? You've said she has moved away, is that away from the loan or away from Australia? If she's just up and left, surely there's some sort of legal avenue you can go down to either force her to pay her share of the mortgage or take full possession without having to pay any penalty? Greg and Terry will have an idea on that I'm sure.
All borrowers would be jointly and severally liable. If she don't pay he must pay and vice versa. Bank could sue one, both or either of them if the loan isn't paid and they would sue the one with the most assets and/or the easiest to locate. If joint owners don't agree on things and there is a stalemate one could apply to the supreme court to appoint a trustee who could then either sell the property or maybe allow one to buy out the other. Very costly though.
