Hi all,
Only my second post and a question that is probably asked a lot!
I have a PPOR purchased in our names (my wife and I) and also a IP in our names. Have we done the wrong thing with the view to further purchases? By this i mean have we limited the amount of money we can borrow to aquire more IP's? I read in Steves book about the ability to legally borrow more times through a trust but i am not up to speed in this area. If i have already purchased 2 properties in our own names is it 2 late to change and now look at setting up a structure to fascilitate further borrowings? I haven't hit the borrowing wall yet just trying to prepare.
This is probably only confusing everyone but if by chance there is someone out there that is able to follow my ramblings i would appreciate any feedback.
Thanks.
DavidThat book is incorrect.
Having a trust, while a great idea, will not help you borrow more.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Actually, I should clarrify.
A trust could help you borrow more if you can get other people to be trustee or director of the trustee company and share holder with you being only a beneficiary.
If you are the person behind the trust as trustee or director of the trustee then each lender will want a personal guarantee. Giving a personal guarantee means you are responsible for the loan if the trustee cannot pay. This naturally affects your borrowing capacity the same as if you got the loan in your own name.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thanks Terry,
Thanks for your reply.
From what i understand is that when you go to borrow money in the trust you give the personal guarentee and get the funds. You then need to set up another unit trust and approach another lender. You do not need to diclose the guarentee of the first loan unless asked and it will not show up on your personal tax records therefore you can borrow again and again each time setting up a new trust.
Does this make any sense?
David
No, doesn't make sense.
Guarantees do appear on your personal credit report and subsequent lenders will see them and ask about them.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thanks for all your input Terry. Looks like i better investigate further.
Take care.
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