Borrowing Through A Trust For An Investment

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stace
Posts: 64
Joined: Wed Jun 24, 2009 4:48 pm

Borrowing Through A Trust For An Investment

Post by stace »

Hi there,

My name is Stace and my husband and I are looking to purchase an investment property through our joint trust. We are looking at borrowing up to $400,000. In our personal savings we have 80k to put towards the purchase.

The properties we have been looking at are in the Gold Coast city area. Most of which have a high rental income as investments.

What we would like to know is can we obtain a mortgage through our trust? How much can our trust borrow? Are there many restrictions on this type of loan? Are there certain types of trusts that are not acceptable to buy through?

With our trust borrowing money from the bank how will the loan be set up? Will my husband and I need to be on the loan as well?

Any information would be great information!

ty

Stace :)

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Otto Dargan
Mortgage Specialist
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Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
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Re: Borrowing Through A Trust For An Investment

Post by Otto Dargan »

Hi Stace,

Banks will accept borrowing through a trust. This is known as a trust loan. You might like to read through our borrowing with a trust page to gain a better understanding of the this type of loan.

There are not too many restrictions when it comes to trust loans. Each bank has there own maximum loan amount for trust loan. However, you are able to borrow up to a standard 95% loan to value ratio (LVR). The main concern banks have with trust loans are that they are a lot of extra work and have extra legal policies in place.

Some banks prefer discretionary or family trusts however the following are widely accepted:
  • Discretionary Trusts
  • Family Trusts
  • Unit Trusts
  • Hybrid Trusts
  • Property Investment Trusts
  • Self Managed Super Fund Trusts (SMSF)
A trust loan is typically set up as your trust being the borrower as well as the mortgagor and you and your husband as guarantors. Being guarantors means you guarantee the loan and are responsible the loan being paid.
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

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stace
Posts: 64
Joined: Wed Jun 24, 2009 4:48 pm

Re: Borrowing Through A Trust For An Investment

Post by stace »

Hi Otto,

Thank you for your information!

My husband and I are glad to know we have some options and are actually able to borrow through our trust!

Thanks again!

Stace

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