How to use a Trust to increase borrowing capacity?

mmmm interesting 

"The way to get around your borrowing limit is once the ABC Bank has said 'no more', create a new trust structure and approach a different bank…" 

Not sure what is eluded to here however, you can always find a bank to get a loan……

One structure to think about is through an SMSF, its called a limited recourse borrowing arrangement or 'bare trust', its used to borrow to invest in property, extremely popular however, i'd suggest a balance of ard $100k and banks allow 80% for residential and 70% for commercial property purchases. 

Sorry if I am not answering the question directly but I have not read the book….

You're not going to improve your borrowing capacity by using a trust. At the end of the day – the individual behind the trust will need to declare their assets/liabilities just as they would if they were applying for the loan under their own name.

Cheers

Jamie

Trusts can improve borrowing capacity in another way.

e.g You own a house in your name. High growth and then you suffer a default – something innocent. You apply to a bank but they won’t allow you to access the equity. You wait 5 years to get back on track.

or

You are director of a trustee company which owns the property. as above you suffer a default. You resign as director and put in your spouse who has no defaults. Loan is approved because you are not involved in any guarantees or assessments (depends on how the trust is set up).

You need to remember with Steve's book that he bought properties years ago and has been fortunate to have massive capital gains which meant he could have a rental increase as well as use the equity to fund more investing.  Steve's use of trusts (i have read most of his books) was a large part for protection incase of him being held liable should circumstances change so he couldn't loose his family home or all of his investments for example.  His structure was quite complicated and i don't think he really fully explains his entire setup.  These days to receive the gains he did is virtually impossible and we need to work a lot harder.  After all, he bought some places near where i was born for 60-80k and they are now worth over 200k without any work…. His books offer a lot of good advice and i learned a lot from them.  But things are different now to when they were written.

Another reason for the trust was distributing income for tax purposes to minimize the amount of tax he paid.

When applying at another bank Re 10 plus years ago. Some banks didn't ask on their loan applications if you were guarantor of any other loans. So you were able to bypass them seeing you had given a guarantee previously. Closed loophole now. 

"Is it still worthwhile setting up a company and trust still?"

That's why you should should seek financial advice 1k plus in advice could cost you a lot less in the long run.

What about using a Pty Limited company to purchase an IP?

Does this avoid the National Consumer Credit Protection Act requirements?

What are advantages/disadvantages of an IP held in a Pty Limited company?

Perhaps trying to avoid it. Due to a lack  of loan Servicablity, if his current job vs existing debt isn't enough to support a new loan. 

Yes i cannot see why you would want to try and get around the NCCP legislation even for serviceability.

It is simple if you can't show you can service the loan you cannot afford.

I am not talking about Tax Returns as these are not always required by lenders.

Cheers

Yours in Finance