Property Investor Trust Loans

What is a property investor trust?

Property investor trusts can be any type of trust that is used to invest in real estate, however they are usually a type of hybrid discretionary trusts. They are typically used by investors that are buying negatively geared investment properties, while those investing in positively geared properties tend to use discretionary trusts.

The variations on investment trusts are endless, please refer to your trust deed and talk to your accountant for financial advice before investing.

Why do accountants set up trusts that can’t borrow money?

Unfortunately many property investors see an accountant, pay $2,000 or $3,000 for a new trust and then find out that few, if any banks will lend money to their trust for it to buy property!

Accountants are rarely expert mortgage brokers, and simply do not know the lender guidelines for hybrid trusts used for property investment.

How much can you borrow?

It is possible to borrow money using a property investor trust if you know which lenders to work with.

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 property investment 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 property investment trusts with a company as the trustee, but can accept trusts with a personal trustee.

Which banks have loans for property investor trusts?

Most banks will not approve normal residential loans for real estate investor trusts that take the form of a hybrid trust. Typically your loan will be processed as a business loan which means you will pay higher fees, a higher rate and will not be allowed to borrow as much!

By applying with a lender that accepts property investor trust loans as normal residential loans, you can get the same discounts available to every other borrower and will only pay an additional $200 to $400 in legal fees.