Why investors use trusts
A trust can help with asset protection, income distribution and estate planning. Whether it suits you is a question for your accountant and solicitor. Once that decision is made, the lending question is which banks will lend to the structure and how they will treat the income.
What lenders look for
Lenders want the trust deed, details of the trustee, and personal guarantees from the directors or beneficiaries. They usually assess servicing on the guarantors’ income plus the trust’s own income, which means they need recent trust tax returns if the trust is already trading.
Where appetite narrows
A discretionary trust with an individual or corporate trustee is widely accepted. Unit trusts, trusts with many beneficiaries, and newly established trusts with no history are accepted by fewer lenders and may attract a higher rate.
Getting it right first time
Set up the structure before you sign a contract, make sure the purchaser on the contract matches the borrower on the loan, and choose a lender whose trust policy also suits your next purchase, not just this one.
General information only. It does not consider your objectives, financial situation or needs. Speak with a licensed adviser and your accountant before acting. See our Disclaimer.
