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.