Going guarantor won't help with servicing – initially. You will still be considered to have the loan. But at least this allows you to remove the guarantee a few years down the track if your spouse is able to service the loan at that point on her own.

Consider the access of equity too.

No real easy way to answer, you need to speak to a broker and work out borrowing capacities based on the above scenarios and see how serviceability will be affected.

Consider also asset protection, succession on death (if in her name and you die…), stamp duty, further strategies..

Off the top of my head, there is a land tax threshold in QLD for trusts. Once you hit the threshold start a new trust and get a new threshold.
Vic is similar to NSW, if fixed unit trust then individuals get the threshold. There is no threshold, or very small for non fixed trusts. In Tassie I am not sure but one of my trusts was paying land tax – the amount was too small to force me to look at the relevant act to find out the rules.

Just clicked on that link and a security threat was detected – take care

The risk is that they damage the property or change it in a way that you don't like and then not settle. You may have to sue them only to find they have no assets. Make sure you get legal advice (from a lawyer!)

Right up RPI's area of practice.

Don't mix personal and investment borrowings in the same loan. You will be able to apportion it easily enough to determine deductibility initially, but as you put more money in it will become a nightmare. Also any further deposits will be coming off the investment portion as well and this will result in more tax.

Solicitor – legal questions.

If you would be buying out the sister you would be using the house as security. Also consider deductibiliy of interest questions.

Depending on the terms of the will the sister may renounce her interest possibly. Possibly other ways too!

If not it would be a sale from the sister to your wife and normal stamp duty etc would apply probably.

Technically the lender is correct to refuse to take into account the trust income. Because the trust is disrectionary in nature there is no guarantee that the trustee will make a distribution to the same person each year, and if they do it may not be the same percentage of the trust income. This is the case if the individual is the trustee and/appointor.

But in practice I have never encountered a problem and this has in fact never been raised with me once by a lender in my 13 years as a broker.

Most banks will take the trust income into account. You should use a broker.

You should not use a company for many reasons. You need to seek legal advice on the structure as there are a number of issues. Set it up wrong and you could lose money and pay for tax and suffer asset protection issues.