QLD Adding and removing people from your property deeds

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JJay

Well-Known Member
12 February 2019
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0
71
Hi,

The advice needed is whether we add our two adult children to the mortgage and deeds on the family home so we can refinance and extend the term to 30 years whilst fix interest for 2 or 3 years.

We are sole traders and COVID saw our 19/20 tax year reduce over 100%, the current year is fine, but as refinance is based over the two year period, we will not be accepted.
The bank manager said adding the kids was fine and this would make it all work.

My question is this,
If we add the two kids to the mortgage and deeds, then in two years after out fixed term expires, we refinance again as our incomes will be consistent, can we then remove the two kids from the mortgage and deeds.
Basically, they are the means to an ends for now so we reduce monthly payments.

Can this be done and at what cost and/or penalties.

Other option, just fix our rate for 3 or 3 years and charge our lovely adult kids board Haha.
 

Tim W

Lawyer
LawTap Verified
28 April 2014
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Sydney
Hard to comment without knowing specifics (no, don't tell us here in the open).
Also, lawyers are not supposed to give financial advice.

So, with that in mind, and with all the many missing facts missing,
and with all the unstated ifs, but, maybes, unlesses, and exceptions not allowed for....

1. You can't add the adult children to your mortgage without their express and informed consent.
If I was your lawyer (or indeed your adult children's lawyer), then I would worry greatly about the ethics of even asking.
Let alone the impacts on them of accepting their offer, about which they are probably naive.
(eg saying, "We can help out, Mum", without knowing the full implications for them personally)

2. Your adult children have no obligations to the mortgage whatsoever.

3. When saying stuff like "Yes, we can add them to the loan contract",
your bank manager is assuming that they have given this full and informed consent.
Further, the bank manager is thinking
more about not having to rehabilitate yet another COVID-damaged loan,
and less about you personally. Even if they say otherwise.

4. If they are adults with jobs, then of course you should be charging them board!
#personalopinion

5. Adding them to the loan now, may see them denied first home buyer support/ benefits/ exemptions themselves, later.
It may also be relevant to their own future borrowing capacity and/or a future lender's serviceability calculations.
There may also be fees attached to any change of the loan contract.

6. Without further delay, get some pro-advice from a CA or CPA. Not a bank manager (they work for the bank, not the customer), nor from a financial planner (they're just salesmen). By contrast, Chartered Accountant or a CPA is all about you, their client.

7. In the end, your question is whether or not doing further retail borrowing,
to kick your personal debt down the road a year or so, is actually the last and only option.
Accountants are the ones qualified to answer that.
 

JJay

Well-Known Member
12 February 2019
16
0
71
Thank you and appreciated. Our children, and us as parents are very open and fluent with every aspect of this, the good, the bad and the ugly and they and us are well informed of possible hurdles moving forward. I may have come across otherwise, and as you pointed out, this can be hard to gauge on an open forum.
Our son in particular teaches us a thing or two and visa versa.
I will take your advice regards checking in with our accountant, but I believe my husband and I are swinging towards a 2 year fixed term on our own for now and charging the buggers some rent. No rent for two years was our way of giving them a set up opportunity, but the tap has now run dry Haha.
Thanks again.
 

Docupedia

Well-Known Member
7 October 2020
306
38
719
8. Adding and removing people to title has stamp duty/transfer duty ramifications, as well as the cost of having to get a valuation/appraisal done due to being related parties. Duty will be payable on the value transferred - not what you actually transfer it for dollar wise (or even via 'natural love and affection'). That duty is payable on the way in, and on the way out - which could be a very expensive option.
 

JJay

Well-Known Member
12 February 2019
16
0
71
Much thanks for that, we are sitting tight and kids will pay some good old fashioned rent.