How much can I borrow?

Lending policy varies for each type of borrower:

  • 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.

We are specialist mortgage brokers and can help you find a lender that will approve your mortgage.

Please contact us on 1300 889 743 or enquire online and a member of our team will contact you to discuss your situation.

How do banks view discretionary trusts?

Around half of the lenders in Australia will decline loan applications for discretionary trusts.

Others will refer you to their business banking department who will then charge a higher rate and additional fees.

This is largely because of the complex legal structure of discretionary trusts and the extra work that many lenders have to do when processing these loan types.

Because of this, it may be hard to get approval or a competitive loan package.

How can I get approved?

The secret to getting a simple and cheap loan is to apply with a lender that is familiar with discretionary trust loans and will consider all aspects of your loan application.

Why do you need an expert mortgage broker?

Due to the complexity of trust loans and the fact that many banks will try to give you a more expensive business loan, it is critical that you obtain the help of finance specialist.

  • We know which lenders will approve loans for discretionary trusts.
  • We know which lenders can give professional discounts and offset accounts for discretionary trusts.
  • We know which lenders do not require guarantees from all adult beneficiaries.
  • 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 trust loans our services are completely free!

If you are looking for an Australian mortgage broker who specialises in discretionary trust loans, speak to us on 1300 889 743 or enquire online to discuss your situation with one of our mortgage brokers.

Can I go low doc?

Low doc discretionary trust loans are only available from a few select lenders. Please discuss this with us before you begin looking to buy a property.

Some lenders have restrictions on lending to discretionary trusts with a company as the trustee, but can accept trusts with a personal trustee.

What is a discretionary trust?

A discretionary trust is a type of trust where the beneficiaries do not have fixed interest. Instead, the trustee determines which beneficiaries are to receive the trust funds and how much each is entitled to receive. However, the trustee must comply with the terms in the trust deed and any restrictions imposed when doing so.

This is unlike a unit trust where the trustee has no discretion and the trust funds are distributed to the beneficiaries in allotted units.

Typically, most discretionary trusts have nominated beneficiaries in the discretionary trust deed which allows income to be distributed to these beneficiaries as well as their family or friends.

Benefits of a discretionary trust

  • Flexibility to distribute income: The income from the trust can be distributed “as the trustee sees fit”, which is usually to the beneficiaries with the lowest taxable income.
  • Asset protection: Protect assets in the event that one of the beneficiaries becomes bankrupt, insolvent or has a marriage breakdown.
  • Minimise risk of legal action: They may form part of a strategy for people that are at a higher risk of legal action (e.g. doctors) as a way of minimising asset exposure should legal action ever be taken against the person.
  • Less regulation: Trusts are not as heavily regulated by government bodies and legislation
  • Customise the trust deed: This way it can be formulated to suit the needs of the beneficiaries and the principals of the trust.
  • Easy to end the trust: Whilst companies have complex structures when winding up, trusts are simpler.

Trying to obtain finance for your discretionary trust? Speak to us on 1300 889 743 or enquire online and one of our expert mortgage brokers will get back to you!

Trust terms explained

There are many parties involved in a trust, each with a distinct role. Here are some of the most important trust terms:

  • Trustee: Is legally responsible for the trust, but does not have any beneficial interest in the trust. The trustee is under a duty to act in the best interest of the beneficiaries and not abuse trust funds. The trustee has the power to select the beneficiaries and the assets or income that they will receive.
  • Appointor: Appoints the trustee of the trust and has the power to remove them.
  • Beneficiaries: The people whom the trust is designed to benefit and who receive the income and assets as stipulated under the trust deed.
  • Butler

    Hi, I’ve heard that major lenders don’t lend to Discretionary trusts, is it real? Do we have to pay higher rates while buying via Discretionary trust than the unit trust?

  • Hi Butler,

    Most of the lender including major and non-major ones usually don’t lend to discretionary trust, mainly because of its complex legal structure and the extra work that many lenders have to do when processing these loan types.

    They usually refer it back to business banking department who may charge higher interest and fees. However, if you can go through the right lender that are flexible dealing with a complex loan for discretionary trust, you may get a good rate.

  • shole

    I would like to use my trust to help me get a 60% + stamp duty loan to buy $525k house from my uncle. My wife owns 40% already. We don’t have any current loans and commitments are low. No savings though.

  • Hey Shole, our mortgage brokers can help you with this. Please call 1300 889 743 to discuss your situation and loan requirements in detail.

  • mankind

    I would just like to know about a situation where if my family is building a house my for (they are tradesman but not builders), will this be considered normal construction?

  • Hi, that would be considered owner builder because they aren’t actually licensed builders. This would mean that your loan may be limited to 60% of the project cost. Please check out the owner builder loans page if you’d like to learn more:

  • Rae

    So how much can I borrow if I’m just getting a regular home loan by myself and not using my trust?

  • Hi Rae,
    You may be able to borrow up to 95% of the property value with genuine savings and a 5-10% deposit but you can also go 100% with the help of a guarantor. If you’d like to find out your borrowing power without a guarantor, please have a crack at our serviceability calculator:

  • Lom

    Hi, doesn’t CBA have delegated underwriting authority? What would happen if a loan were to fall outside the DUA criteria?

  • Hello Lom,

    Yes, CBA do have DUA. If a loan were to fall outside their DUA then it will be referred to the mortgage insurer for a decision. The strict guidelines and credit scoring used by the insurer will then apply. In most cases, this means that the loan will be declined.

  • Phillip

    Hi, is there a lender out there that would consider lending to a discretionary trust without having to require guarantors (both directors of the corporate trustee as well as beneficiaries)? If so what level of assets is required within the trust in addition to rental income? Thanks.

  • Hi Philip,
    For a standard residential property in a trust this is not possible. The only time it is possible is for a large commercial loan approx $5m + with a low LVR.
    There are some lenders that require beneficiaries to be guarantors and others that don’t. It’s best to go with a lender that doesn’t require beneficiaries to be guarantors and then you can decide who the director(s) are and only they will need to give guarantees.

  • Mathilda

    I am planning to get a loan from my trust. But I heard that mortgage brokers charge extra to write such loan. What is the standard fees?

  • Yes Mathilda, usually all lenders will charge additional fees for lending money to a trust. This is reasonable because there’s additional work to be completed in preparing the guarantee and indemnity documents for the trustee and the beneficiaries (if applicable) to sign. In most cases, the additional legal fees charged by the bank are between $200 and $500. On top of that, mortgage brokers may also add a fee for the complication writing the loan. Please call us on 1300 889 743 or complete our free assessment form today!

  • SE

    Hi, can anyone provide me an idea how a Discretionary Trust gets funded? i.e. Do I need transfer money to Trust account? how is that treated – as a loan or gift? implication of this? My goal is to keep enough money in Trust Offset account to reduce interest expense, but also would like to have the ability to withdraw when needed. How is that achievable? Thanks.