What is a family trust?

Family trusts are a type of discretionary trust where the beneficiaries of the trust are all related. For this reason they are often referred to as a “family discretionary trust”. Just like with a discretionary trust, the trustee can distribute income as they see fit to the various family members and their friends.

This has the benefit that income/profits from the trust can be distributed to the children or young adults that have lower taxable incomes. Discretionary trusts are also used to assist protect assets in the event that one of the family members has a business failure or marriage breakdown. Some families use a family trust as a method of passing assets to future generations.

How do banks view family trusts?

Banks view family trusts in much the same way as they view discretionary trusts. Around half of the Australian lenders will decline loans for discretionary trusts. Many will instead refer you to their business banking department who will then charge a higher rate and additional fees.

We have mortgage brokers that specialise in family trust lending and can find a lender to approve your mortgage with a normal residential loan with professional package discounts.

How much can you borrow?

Standard loans (full doc): 95% of the property value.

Investment loans: 95% of the property value.

Low doc (no income evidence): 80% of the property value.

Discounts: Competitive professional package and basic loan discounts are available.

Note: Low doc family trust loans are only available from a few lenders, please discuss with us before you begin looking to buy a property. Some lenders have restrictions on lending to family trusts with a company as the trustee, but can accept trusts with a personal trustee.

Which banks can approve loans for family trusts?

Unfortunately it isn’t as simple as just knowing which lenders will consider loans for family trusts. Lenders are constantly updating their guidelines for both family trust loans and low doc loans.

We can help you by looking at your entire situation and finding a few lenders that lend to trusts for you to choose from.

• We know which lenders will approve loans for family trusts.
• We can get your loan approved with lenders that have fewer fees for guarantee & indemnity documents.
• We know how to structure loans with the correct entities as borrowers and mortgagors.
• For the majority of family trust loans our services are completely free!