Partial ownership

[yaigesh]

Hi All

I have a question regarding partial ownership. If someone is buying a first home and they do not have the deposit. So, they ask someone to help them with the deposit. In return, the investor asks for partial ownership of the house (something like NZHF). Now, can the first house buyer still use his Kiwi Saver? Also, will it be considered with 20% deposit as it is First home for one of the owner but at the same time, investment property for the partial owner.

Please help..

[Aston]

Now, can the first house buyer still use his Kiwi Saver?

Also, will it be considered with 20% deposit as it is First home for one of the owner but at the same time, investment property for the partial owner.

The answer to the first question is yes.

I am fairly certain that the 20% deposit still applies but you would need to clarify that. Give them a call.

[Bobsyouruncle]

You can just leave in (up to) 20% in as deposit and take a second mortgage on the property. This is the simplest way. I have started doing this on trades recently, very straight forward. The bank doesn't care as they hold the first position. The only "risk" is the banks priority amount means if things got really curly and the owners racked up a whole lot of penalties you technically have little security. If purchase price was say 700K the banks priority amount is usually 1.4, (double purchase price). Of course this is only an issue if you didn't vet the buyer at the start and you allowed delinquency to go on a long time.

[Wayne]

If they had a mortgage and other loans with the same bank could the bank take all the proceeds of the house to cover those other loans as well?
So it isn't just delinquency of the house loan that is at risk?

[Bobsyouruncle]

Only if the bank cross collateralised everything. I wouldn't lend to anybody who had other credit I make them clean it up first. Providing you are only leaving in margin the actual loss of capital risk is zero. It is only loss of profit exposure.

[Wayne]

Only if the bank cross collateralised everything. I wouldn't lend to anybody who had other credit I make them clean it up first. Providing you are only leaving in margin the actual loss of capital risk is zero. It is only loss of profit exposure.

They may clean their debt up but what stops them getting more after?
I know going guarantor for someone leaves you open (depending on how it is set up) to their future debt without the ability to control it.
Banks generally take all they can - I have a suspicion that they would use the mortgage security to cover other debt and the 2nd mortgage could miss out.

[Bobsyouruncle]

That's always a risk Wayne but you can only do your homework on people and make a decision.

[Wayne]

That's always a risk Wayne but you can only do your homework on people and make a decision.

U suspect you have missed my point but that's OK.