Hybrid Trust Loans

What is a hybrid trust?

A hybrid trust is a combination between a discretionary trust (or family trust) and a unit trust. The result of this combination is a trust that has the best of both worlds. There are several types of hybrid trusts including hybrid unit trusts and hybrid discretionary trusts with the latter being more common.

Although there is much variation between different trust setups, most hybrid trusts issue special units and have the discretion to distribute income to beneficiaries and special unit holders. We strongly recommend that you talk to your accountant before setting up a hybrid trust or using one to borrow money.

Why don’t most banks lend to hybrid trusts?

There are private rulings from the ATO which indicate that they may disagree with the way some hybrid trusts are used to minimise tax when investing. Because of this uncertainty many banks refuse to approve home loans for hybrid trusts.

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): 60% of the property value on a case by case basis.

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

Note: Low doc hybrid 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 hybrid trusts with a company as the trustee, but can accept trusts with a personal trustee.

Which banks have loans for hybrid trusts?

Some banks do lend for hybrid trusts however the choices are limited. The secret to getting a loan with a low interest rate is to find a lender that will approve your mortgage as a residential loan rather than sending your application to business banking.

As a mortgage broker that specializes in lending to trusts, we can find a lender for you quickly and set up your loan with the structure recommended by your accountant.