As you may know, a trust structure comes with tax advantages and asset protection for investment properties and not only. However, it is known that many lenders don’t actually know how a structure trust loan works – and this may result in you, the borrower, missing out on certain tax advantages and potentially wasting your time with the wrong lender.
This is why, before applying for a home loan with a trust structure, you have to make sure that you fully understand how this process works so that you don’t miss any benefits.
As soon as your lender receives your trust loan application, they have to carry out a credit assessment so that they find out if the loan can be approved or not.
For this, they will have certain requirements that have to be fulfilled. Here is what they will be taking into consideration when reviewing your trust loan application:
The Type of Trust
The assessment process is based on the types of trust that exist out there. For example, some financial institutions prefer family trusts while other institutions usually go for discretionary trusts.
In some instances, banks may also go for self-managed superannuation fund trusts or hybrid trusts. How you set up your trust structure is important because it is one of the elements that vary depending on your lender of choice.
You will have to either shop around for lenders or ask your mortgage broker for counsel as to which lender is the perfect fit for you.
The Credit File of the Trust
Banks will also assess the trust credit file. This is an important part of your application, as these firms usually maintain a credit file – as well as some directors or beneficiaries.
The credit file of the trust will be submitted along with the loan application for a better, proper assessment.
Beneficiaries
The institutions that have control over the lender will require you to have adult beneficiaries as guarantor. Moreover, depending on the type of trust structure you have, the number of beneficiaries may vary.
You can expect from two up to four beneficiaries in total. This is another reason why the structure of a trust makes it difficult to use it in order to take out a loan.
The Loan Structure
Most of the times, individuals don’t apply in the name of a trust. Instead, they apply for a loan in the name of a trustee or a director. They do so to access negative gearing benefits – especially when it comes to unit or hybrid trust.
Trust Deed
By using a trust deed, banks will identify the beneficiaries and trustees for those companies. A trust deed gives a lender the opportunity to evaluate and determine whether trustees or beneficiaries are in a position where they can borrow money.
Naturally, you will also have to provide the bank with additional documents so that they can process a loan for a trust. Make sure to have all of the following before applying for a home loan with a trust structure:
1. Certified copy of the stamped trust deed.
2. If there’s a company trustee, a certified copy of the company constitution.
3. Identification for all beneficiaries of the trust, trustees, and directors of trustees.
4. Notices of assessment and tax returns for the trust. These documents are not always required – for example when it comes to new trusts or low doc trusts.
It is possible for trusts to get discounted loans. The secret behind this is to find a lender that knows how to work with your particular type of trust, as well as with your proposed loan amount.
In case you find a lender that doesn’t know how to work with your type of trust, you will most likely not get a discount and you may also miss on some tax advantages.
For example, it is important that your lender processes your loan as a residential one and not as a commercial loan. If they do so, you will end up paying more fees at a higher rate.
On top of that, there are a lot of lenders that can’t approve residential loans when they are associated with trusts at all. This makes most people wonder if they will ever be able to buy an investment property with a trust structure. Rest assured, we know the right lenders who accommodate trust structures for residential and commercial purposes with both individual and company trustee structures.
1. Self-Managed Superannuation Fund Trusts
2. Property Investment Trusts
3. Hybrid Trusts
4. Unit Trusts
5. Family Trusts
6. Discretionary Trusts
Even though all of the mentioned trusts can apply for home loans, only a few lenders will actually approve them. For example, trust with corporate/company trustees and hybrid trusts are usually more difficult to achieve in terms of financing.
It is also important to know that every bank may charge an additional fee when lending money to a trust. This is because of the extra work needed to guarantee preparation and indemnity documents.
While applying for home loans with a trust structure is possible, there are a lot of other aspects that you have to take into consideration.
The most important one is finding the appropriate lender for you. This implies a lender that can work with your type of trust so that you enjoy all of the benefits that come with it – asset protection and tax advantages.
Even if the lender provides you with a good loan offer, you have to make sure that they can work on your type of trust and, overall, make it favorable for you.
If you have any questions or need more information, keep in mind that you can always contact us! Our staff will always help you find the best loan, according to your needs. With years of experience in the field, we will guide you through this process and help you apply for a home loan in no time!
Get in touch with us because we are always ready to provide you with our assistance!
Contact us on 02 8530 1107 or submit your scenario online
Whether you’re a first home buyer looking at entering the market or an existing home owner looking at ways to save money on your home loan, we have you covered. We’ve put hundreds of hours of research into these guides to ensure you end up ahead, and it’s completely on the house.
The odds are that you’ve stumbled across the term lender’s mortgage insurance and you’re wondering what it stands for. Well, you’ve come to the right place. This article will clarify this term, so that you can understand what it is, the concept behind it and the approximate costs. Let’s get started!
Buying a home or a property may imply a deposit. You may come across home loans that require no deposit at all, but their approval criteria are known to be tough.
Therefore, you are left with only one thing to do – namely, to save a deposit so that you will be able to purchase a home or a property.
Getting a home loan is itself a difficult thing to do, depending on certain circumstances. However, getting a home loan with a bad credit rating is probably the most difficult thing you’ll have to get through when trying to settle yourself in a new house.
The odds are that you’ve stumbled across the term lender’s mortgage insurance and you’re wondering what it stands for. Well, you’ve come to the right place. This article will clarify this term, so that you can understand what it is, the concept behind it and the approximate costs. Let’s get started!
As we all know, saving money for a deposit can be quite difficult, especially when we are in a tough spot. Moreover, if you want to use that deposit in order to get a home loan and fulfill your dream, things are probably going to get more stressful for you in no time.
When you’re applying for a home loan, your lender might want to know how you plan to exit it. After all, it is a lender’s job to make you understand that you do have to plan your loan repayments and so on.
In this respect, you will need to come up with a proper mortgage exit strategy. You have to make sure that the financial path that you choose will be able to make you exit your mortgage on time and avoid missing any payments.
Trustindex verifies that the original source of the review is Google. 
Trustindex verifies that the original source of the review is Google. 
Trustindex verifies that the original source of the review is Google. 
Trustindex verifies that the original source of the review is Google. 
Trustindex verifies that the original source of the review is Google. 
Trustindex verifies that the original source of the review is Google. 
Trustindex verifies that the original source of the review is Google. 
Trustindex verifies that the original source of the review is Google. 
Trustindex verifies that the original source of the review is Google. 
Trustindex verifies that the original source of the review is Google. We get paid a commission from our lenders as a result of introducing your business to them. Subsequently, our service is at no cost to you. Our commission does not affect your interest rate whatsoever, if anything, we’re in a position to get you a lower interest rate than the general public due to our relationships with our banks
We meet for a consultation, obtain your supporting documents and proceed to structure and package your application for approval knowing exactly what the banks want to see. We also monitor your home loan post approval ensuring you’re home loan suits you and your financial position
With our many years experience in the industry, we’ve been exposed to both easy and complex loan scenarios. Each loan we process gets presented to over sixty financial institutions, ensuring we have explored all options possible and are able to provide a solution
What you need to know before you purchase your first property and how to fast track it. We have designed this guide to get you up to date with everything you need to know about being a first home buyer. Whether you have a short term goal of purchasing your first property or are thinking about it sometime later down the track, this guide will cover important essential aspects of this exciting journey.
What the banks won’t tell you and how to save serious money on your home loan. By Investing 10 minutes of your time to read through our guide, not only will you learn the tips and tricks the banks won’t always tell you to assist you with paying off your home loan sooner, but also gain an insight into some techniques that will allow you to minimise the interest you pay to the bank.
The best way to take control of your finances is to use a budget planner. This is a simple tool that helps you understand the money going in and out of your household. With our Highline Lending Budget Planner, we’ve got you covered. This handy tool allows you to log and track your goals, track your savings, track your debt and expenses and keep a monthly record for an end of year evaluation.
