Do you want to invest in the property market? You may find that obtaining finance for a unit trust is more difficult than expected.

Not all banks view trust loans the same way. You can borrow more at a better interest rate by choosing the right bank!

How much can you borrow?

  • 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.

Low doc unit trust loans are only available from a few lenders. Please discuss with us before looking to buy property.

To get the best loan package around for your unit trust, call us on 1300 889 743 or enquire online today. Our expert mortgage brokers know how to get tough loans approved!

What if a company is the trustee?

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

It largely depends on the lender that you apply with.

Can I get the loan in my name?

When using a unit trust to buy a property you have the choice of putting the loan in your name (as the trustee / director of the trustee) or in the name of the trust itself.

The problem is that many lenders can’t setup the loan to be in your name with the property in the name of the trust!

This is because they either don’t understand the structure, their system will not allow it or their policy does not allow it!

Which banks will allow it?

The good news is that there are several lenders that can allow you to use this structure, and they all have very competitive interest rates!

By setting up the loan in your name you may receive some tax benefits that are not available if the loan is in the trust.

Please discuss this with a qualified accountant for more information.

To apply for a trust loan in your name, please enquire online or contact us on 1300 889 743 to discuss the structure of your finance with one of our mortgage brokers.

How will the trust loan be structured?

The structure may look like this:

Director of the trustee company: Joe Bloggs

Borrower: Joe Bloggs

Mortgagor / property owner: Example Pty Ltd As Trustee For The Example Unit Trust

Guarantor: Example Pty Ltd As Trustee For The Example Unit Trust

Or alternatively, the loan can be set up with the company as trustee for the trust as the borrower.

Director of the trustee company: Joe Bloggs

Borrower: Example Pty Ltd As Trustee For The Example Unit Trust

Mortgagor / property owner: Example Pty Ltd As Trustee For The Example Unit Trust

Guarantor: Joe Bloggs

Some lenders don’t accept the first structure which has the individual as the borrower. All lenders that lend to unit trusts will accept the second structure. We will ask your accountant prior to submitting your application to the bank.

What if an SMSF owns the units of my trust?

This structure is complex and almost all banks do not accept it.

There are no standard residential lenders that can help if two separate super funds own units in the trust.

However, if just one SMSF owns units in your trust and the beneficiaries of the SMSF are the same as the directors of the trustee company of the unit trust, there is a benefit for the guarantors of the loan. In this case, we can help you to get approval.

Only one of our lenders can assist with this structure. Please call us on 1300 889 743 or enquire online to talk to one of our mortgage brokers to find out which lender can help you get approval.

Discover moreabout unit trust loans with an SMSF as a unit holder.

How do banks view unit trusts?

The majority of banks have very strict lending policies in relation to unit trusts. There are several banks that will lend to discretionary trusts but will not lend to unit trusts.

This may be because:

  • The trust deed is more complicated and the bank needs more experienced staff to assess the document properly and confirm that the trust is allowed to borrow money.
  • Many banks computer systems are not set up to process unit trust loans.
  • Unit trust loans are less profitable for banks than normal home loans because of the additional paperwork. For this reason, they avoid them altogether.

Don’t worry! There are lenders that can approve loans for unit trusts, you just need to apply with the right lender for your situation and trust type.

To speak to a mortgage broker who specialises in unit trust loans please call us on 1300 889 743 or enquire online today!

What is a unit trust?

Unit trusts are different to discretionary trusts in that the trust issues units which then determine how the income from the trust is distributed by the trustee.

The trust pays distributions to the unit holders in the proportion of units that they own. So in effect, the unit holders are the beneficiaries of the trust.

What does a unit trust look like?

A typical unit trust may be set up in the following way:

For example, if John has 60 units and Sarah has 40 units then John would receive 60% of the unit trust income and Sarah would receive 40%.

In most cases, the trustee’s powers are limited by the trust deed so that the trustee does not have any discretion as to how the income is to be distributed.

Who can be a unit holder?

Units can be owned by people, companies or by other trusts and there is often no limit on the number of unit holders.

Unlike a discretionary trust, units can also be sold, transferred or even redeemed (purchased back by the trust).

What are the benefits of a unit trust?

There are many benefits for investors that choose a unit trust structure. These include:

  • Simple: the ‘units’ in the trust are recorded and registered so that the income and assets belonging to each party are easily defined.
  • Easy to transfer: your share in the trust can be easily transferred to another beneficiary or can be cashed in or traded.
  • Not heavily regulated: unlike a company, a unit trust is not subject to as many legislative requirements or restrictions.
  • Save on tax: a unit trust may also have some attractive taxation reductions and benefits.
  • Custom trust deed: this can be drafted to suit the beneficiaries

Disadvantages of a unit trust

Asset protection in a unit trust is weak as the units can be acquired and sold to pay creditors, in the event of bankruptcy.

It’s also more complex to make tax-free distributions.

This makes a discretionary trust a more appealing option as it is much more flexible and distributions can be made on a discretionary basis.

Despite the disadvantages, a unit trust is a great vehicle for investment!

If you would like to borrow for your trust, please enquire online or call us on 1300 889 743 to speak to an expert mortgage broker who can help you get approved.

Company or unit trust?

Owning units in a trust is often viewed as similar to that of being a shareholder in a proprietary limited company.

However, there is a distinct difference! Unlike a share holder, a unit holder has a proprietary interest in the trust.

This means that they can put in place restrictions such as caveats, over the property.

Which is better?

Whilst both options offer great structures to conduct business, there are distinct advantages relative to both models.

A trust is a private arrangement and as such, it is not subject to the same complex legislation that governs companies.

Under both structures you can sell off your shares and units and create similar conditions, such as offering them to other shareholders/ unit holders, before selling to an open market.

Apply for a unit trust home loan!

We are specialist mortgage brokers with in depth knowledge of unit trusts.

We know which lenders may approve your loan. We can even help with low doc unit trust loans in some situations!

Our team can perform a comprehensive analysis of the various banks guidelines to determine which banks will accept your loan.

Please contact us on 1300 889 743 or enquire online and one of our brokers will give you a call to discuss your situation.

  • Samuel

    Will a shareholder be held responsible in case of default of the mortgage under the name of the trust?

  • Hi Samuel,

    The guarantors or the shareholders of the trust who were on the loan application will be held responsible for defaulting on the loan.

  • Lomas

    Not all banks lend to trusts though, is it because of they see it as more risky than individuals?

  • Hey Lomas,

    Many banks believe that loans to some types of trusts could be legally unenforceable in the event that the borrower can’t repay the loan. Also, many lenders are worried that the ATO may change taxation rulings about trusts, which in turn will affect the people they have lent money to. The main reason that most lenders don’t lend to trusts though is because trust loans are less profitable to them as a result to extra work of preparing mortgage documents and the checking of the trust deed.

  • Riley

    I’m an investor and I like that we can borrow up to 95% LVR. What’s the lending criteria for that though?

  • Hi Riley,

    To qualify, most lenders will require you to have 5% genuine savings, equity in another property (exceptions can be made), stable employment with strong income, clean credit history and standard properties in capital cities or major regional locations (some lenders can consider exceptions).

  • Adrian

    Will the banks accept a property valuation that I conduct myself?

  • Hello Adrian,
    Unfortunately, no. Most banks and lenders won’t use a buyer’s own valuation. If they do then it will only be under exceptional circumstances. Most banks require that the valuation to be ordered through them. This is due to issues that banks have had in the past with fraud.

  • Bray

    Hello. I’m sorry that this won’t be related to this page but I had checked out a pretty cool graphical poster on the first Australian settlements and other historical info on your website a while back. I forgot what page it is so can you please link me to that? I would very much appreciate it, thanks.

  • Hi Bray,
    Is this the one that you’re talking about? “When land used to be free in Australia”:

    If it isn’t, you can try looking for it using our website’s search:

  • Bray

    Yes, that’s the one! Thank you very much.

  • Viktoria

    Hi team. I have a family trust with my parents and wife listed as the beneficiaries in it. I am planning to buy an investment property from trust. I just want to know whether I have to pay extra for the trust home loan?

  • Hi Viktoria,
    Almost all lenders will charge additional fees for lending money to a trust. This is 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. You could learn more about family trust loans here

  • Anney

    In the example above, Joe Bloggs is the Guarantor and director of the trustee company.
    – What does ‘Guarantor’ mean in this case? Does Joe Bloggs need to have another property as security?

    In the same example what if Joe Bloggs does a Joint Venture investment with another partner, do both have the be the Guarantors?

  • Hi Anney
    In this case what it means is that Joe is giving a personal guarantee for the loan taken by the trustee on behalf of the trust. He wouldn’t need to provide any property as security for this guarantee. It would mean that in the event of the trust being unable to pay the loan and the property being sold to recover the debt then if there was a loss made by the bank then they would pursue Joe for any remaining funds.

    Any partner Joe has in other ventures do not need to be guarantors for the loan in the trust.

  • Anney

    Thank you!
    In the case of Joe’s personal guarantee, does the bank take into account Joe’s personal asset (property) then even though no security necessary.

    In the Joint Venture partnership case, if both parties are ‘directors’ of the trustee company, you mean either one can be guarantor and not necessarily both?

  • Hi Anney
    The directors must declare all of their personal assets and liabilities even though the assets are not used as security.
    Both directors of the trustee company must guarantee the loan.

  • Anney

    Love your rapid response. THANKS.

  • Anney

    @homeloanexperts:disqus, I invest in properties and have partners in other states. Do your have any branch or loan representatives in other states outside your NSW office? or communication done via phone and online only?
    In the recent banking royal commission on ‘responsible lending’ issue. How difficult is it to do 1) refinancing 2) draw out equity to do further investment 3) apply for interest only loan.

  • Hi Anney
    We work with customers all over Australia. Our head office is in Sydney however we have offices in Asia and Europe to assist with clients in those locations who are financing properties in Australia. We don’t have offices in other states of Australia so we usually just do a skype call.
    We’ve written an article on borrowing in 2018 that you may find helpful

  • Anney

    Hey @@homeloanexperts:disqus, you have a dedicated online person responding to online comments/enquiry? you are very fast in responding. Like it!
    I must say you seem very knowledgable and experience. Saying that, I have previously dealt with some brokers who claimed to specialise in ‘Investment’ loans but are not creative nor flexible at all. Hope you are not like those :). I noticed you seem to offer in many types of loan – how are you not spreading yourself too thin? Are you specialising in ‘Investment’ loan (and not only owner occupied loans)?

  • We just enjoy talking to you Anney :)
    We’re a specialist mortgage broker so different mortgage brokers in our team have different areas of expertise
    So we do many types of loans however we have expertise in each area.

  • Anney

    Great team. So, what’s the process of contact one of your brokers. Simply email or call to speak anyone directly or one of the brokers will be assigned? What if I don’t like the one’s been assigned for no-personal reason :( or prefer a particular broker for no particular reason than simply nice to deal with.
    Also, will I be assigned an account manager for future loan enquiry? or I have to speak to first available consultant all the time?

  • Hi Anney,
    I’ll email you and cc a mortgage broker with experience in trusts. If you aren’t a fan of the broker then just let us know and we’ll assign someone else. That broker can work with you for future loans as well.

  • Chris Stevens

    I am new to unit trusts.
    I am the trustee and my son and daughter are unit holders (12 &5) and my wife. The trust has $100k in it. Do I have to prove my income as the trustee? Does my wife also have to prove her income as a unit holder? even though the trust has made $100k this financial year.

  • Chris Stevens

    I gather that no one responds to these things?????

  • Chris Stevens

    What would Joe need to provide? you say a guarantee, but does the bank need his income etc? or just the financials for the trustee company?

  • Hi Chris,
    Sorry for the delayed response. Yes, most lenders require that you need to provide income evidence for the trust and the trustee, although it may not be required for the unit holder. Call us on 1300 889 743 if you want to know more about unit trust loans.

  • Chris Stevens

    I provided the wrong info. My underage children are unit holders in the trust, the trustee is a company and I am the sole director of the company that is trustee to the unit trust. Do I have to show my income?

  • As the director of the company, which is the trustee of the trust you need to provide income evidence for a home loan.

  • Alfions Nordberg

    Hi, if I have a unit trust which buys 1 property and where 50% of the units are owned by external investors who inject 50% of the property value for their units in cash. Am I able to obtain a loan for the other 50% of the units and property value? Eg. Property Value = $1m. External investors invest $500k to buy 50% of unit trust which holds property. Can I obtain a loan for $500k? If not, what sort of percentage of the remaining 50% could I borrow assuming all my other servicing was in line.