All Topics / Finance / “Hiding” loans from banks, etc

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  • Profile photo of kopidudekopidude
    Member
    @kopidude
    Join Date: 2010
    Post Count: 2
    July 10, 2010 - 9:49 am

    Hi all

    I have a few properties already, that I purchased in my own name.
    I recently read "0 to 130 Properties…" which recommends buying real estate under a trust structure for various reasons. My understanding of one of the reasons is that it allows you to borrow more money by effectively hiding loans that you are guarantor for.
    The way I read it is:

    • You apply to purchase a property through a trust
    • The loan is in the name of the trust, not you personally
    • You go guarantor for the loan
    • The fact that you are a guarantor but the loan is not in your name means that the loan does not have to be disclosed to other sources of finance
    • As the other finance sources do not "see" this arrangement the amount of income available to service an additional loan is greater

    This past week I was speaking with a mortgage broker friend and mentioned the above. He was adamant that it would breach all types of laws and would not work.

    Have I misunderstood this or is my broker friend wrong?

    Thanks for any help.

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024
    July 10, 2010 - 10:55 am

    Your Broker is correct and Steve has clarified this in several posts.

    Richard Taylor | Australia's leading private lender

    Profile photo of ducksterduckster
    Participant
    @duckster
    Join Date: 2004
    Post Count: 1,674
    July 10, 2010 - 11:00 am

    I was told that banks do not like to lend to trusts. However a company owned by a trust can borrow, however the director goes guarantor for the company loan, which you would have to declare to another bank that as a director you have guaranteed a loan for .company XYZ. And with these new credit laws you have to prove you can afford the loans/

    Profile photo of BankerBanker
    Participant
    @banker
    Join Date: 2010
    Post Count: 371
    July 10, 2010 - 11:38 am

    With all banks your are required to disclose debts you have in your name or have guaranteed. Even if directors guarantee.

    Profile photo of v8ghiav8ghia
    Member
    @v8ghia
    Join Date: 2005
    Post Count: 871
    July 10, 2010 - 1:19 pm

    I don't think you will find a home loan application form that does not ask that very question…..' Are you a guarantor for or do you act as guarantee for……..etc etc'.
    Even if you wanted to lie (that is non disclosure really I guess isn't it) you may get a surprise just how much info some lenders can glean from you credit file….and 'forgetting' to mention a liability does not improve your chances of getting approval.

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    July 11, 2010 - 9:31 pm

    Lenders will see the guarantees on your personal credit file. They will also see all the companies in which you are a director and usually they will also do a credit check on these companies too – tho in may make it hard if you are a director of 100+ companies.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

Viewing 6 posts - 1 through 6 (of 6 total)

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