I am doing the research reading the books before buying my first ip.
My mortgage broker tells me that because I am a first time investor and I dont have much in the way of records being self employed etc that it would be difficult to get a loan for a property if i was to attempt to do so in the name of a trust.
I am not so sure that this is true.
I am wondering if it is?
I am thinking of forming a company as trustee with myself and my wife as directors and then forming a trust with us as and our child as beneficiaries.
Ideally I want to buy under the trust structure to protect my wealth and also so i can leverage my earnings that little bit further by replicating the structure many times over.
If banks aren’t going to loan me money via this structure is my only option to buy my first ip in my own name to get a good reliable repuation or should I just find myself loans or a mortgage broker that knows more??
Thanks for all that help.
…and a Happy New Year and Much Prosperity Abundance and Passive Wealth to You All.
Chris[biggrin]If your MB is telling you that i would be switching MB’s immediately as it is obvious he / she lacks experience in Company / Trust structuring.
If the fact is that you cannot evidence your income sufficiently to obtain a loan in your own name then purchasing it in Trust with a Pty Ltd Trustee will have absolutely no bearing on the application if the Directors and Guarantors are the same.
There are many lenders who will consider lodoc / nodoc lending in a Company / Trust name although obviously this would be the last resort as where possible you would look to take out a status loan initially.
Unfortunately, with the growth in the number of MB entering the marketplace you do find that some brokers have less than 5 years experience and are unable to grasp the concept of loan structuring.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
Looking for life cover – We Guarantee to beat any quote you have in writing.Richard Taylor | Australia's leading private lender
To carry on from my previous post there are many lenders who do not allow lending in such structures however half the craft of a good MB is being aware of what each lender offers and what they don’t like.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
Looking for life cover – We Guarantee to beat any quote you have in writing.Richard Taylor | Australia's leading private lender
Thanks Richard,
I will heed your advice. I was suspecting as much myself.
Kind Regards
Chris BarnabyAnother point Chris.
If you purchase through a trust, I advise to make the loan in the trust name with you and/or your partner if applicable as guarantors, rather than putting the loan into your name. The banks do not care, but it may affect future loans.
I agree with Richard, a brand new trust can get finance just as easily as an individual.
As for the directors etc of the trustee company, why bring you wife into it? You are only creating more risk and reducing borrowing capacity.
Bridgebuff, cannot see how that will affect future loans. All loans would normally be in the name of the trustee and/or trust (doesn’t matter really). The only time you would have loans in your own name is for a hybrid trust. If you didn’t do it this way, the individual could not claim the interest – defeating the purpose of having a hybrid.
Terryw
Discover Home Loans
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Hi Terry looking at your answer regarding bringing a wife into the loan for the borrowing for the Trust. I want to ask your advice if i am working full time and my wife is working full time.
Say i want to borrow to buy a house through my HDT i get the loan in my name and then lend it to the trust who in then purchases the property is that correct. What if my wife also wanted to purchase a property could she do exactly the same thing and then get a loan in her name and lend to the trust and the trust can buy it for both of us.
is that how it can work, i am still learning.,
thanks[specs]
Hi Pos
Someone else has recently asked me a similar question – might have been you?
With a hybrid trust you do not borrow and lend to the trust. You (or one of you – the hughest income earner usually), you borrow from the bank to buy units in the trust. So the trust sells you the units. The security for the loan is the trust property.
If you were the unit holder, you would get the loan in your name. The owner oif the property would be the trustee.
If your wife then wanted to buy a property, this is ok. I beleive another person could also buy units in the same trust, but the trustee would still own the property.
Terryw
Discover Home Loans
[email protected]
Send an email to get my newsletter.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
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