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Has anyone been on either side of this?
The sale of our block has fallen through :wall: My sister has expressed interest in taking over the mortgage as she wants both blocks. We're willing to look into it, would obviously be setting it all up legally so we're both covered. Just wondering if anyone has any tips or experience?
I have not had any experience with this myself, but from memory the Rent to Own scheme run by a certain American got some big question marks from ASIC a few years ago.
However seeing as it is your sister things would be a little different. I would suggest that each of you obtain independent legal advice (from separate firms) and that those firms have experience in property law. A Deed be drawn up and that Deed can contain anything you and your sister (and any other parties agree to) as well as any safeguards the lawyers suggest. Safeguard can be about what happens if a party defaults on the payments, increases subject to interest rates etc.
I hope this helps.
Look into how if works. Usually the corporations make their money by adding a lump sun to the price of the house (one I investigated was an additional 20k), and then charge a higher interest (2% or so) above the banks lending rates. It works for them. They make moolah. It messes with vulnerable people who can't get a bank loan for a mortgage....
A set up like that would be more clear cut if it wasn't a family member. Emotions can make things very difficult! Make sure it's all drawn up legally with all possible scenarios looked at regarding defaults etc.
Why doesn't she just buy it off you?
My thoughts exactly. If she wants to go to the hassle of seeing lawyers to sort out what happens with mortgage/title/repayments etc, she'd be better off just taking out a loan and buying it.:
Maybe she doesn't have the financial backing to take out a loan of her own accord?
The only thing I'd worry about, if she can't get a loan of her own, is how she'll be taking over the mortgage. BC, if you have a loan with your bank and they have a mortgage over the title, even if your sister is making the repayments you're liable for the debt and if she stops the repayments you'll be the one in default. You'll still have to note the debt on all your other loan applications etc.
Also, you can't transfer the title to your sister unless she is willing to guarantee your loan - if she's not eligible for a loan of her own this will be hard to do and banks don't generally like it. Essentially I can see you having the debt/trouble while your sister gets to do what she likes with the block, so I'd definitely go see a lawyer.