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Mufti Finance

    Borrowing with a trust

    When assessing a loan for a trust entity, most lenders will look at the income, assets and liabilities of the trust and the trustee. If the trust has been recently established, the assessment will usually be based on the guarantors involved and their personal capacity to service the loan. Depending on the lender, a trust may be able to borrow at similar rates offered to individuals.

    A few things to consider when looking at purchasing a property in a trust:

    • Type of trust: Trusts can be established for a variety of purposes. The type of trust you setup should be considered prior to purchasing a property as this cannot be changed easily. We encourage you to obtain tax advice prior to setting up a trust entity.
    • Loan structure: You can choose to have the loan approved in the name of the trustee or director of the trustee company rather than in the name of the trust. This is usually done to take advantage of negative gearing benefits when purchasing in a fixed unit or hybrid trust.
    • Beneficiaries: The beneficiaries of the trust are individuals or entities for who the trust is setup to benefit with either income or asset distribution. You need to consider this carefully as some lenders require all adult beneficiaries to be guarantors for the loan under the trust. We recommend you obtain tax advice when deciding beneficiaries for your trust.

    If you would like to learn more about trusts or trust lending, please contact our office on 02 9675 4393 or book a consultation!

    What documents do lenders ask for when submitting a trust application?

    To start with, we will request:

    • A copy of your executed trust deed
    • ID for all trustees (including directors) and beneficiaries of the trust.
    • Financials and tax returns (if the trust has been trading)