Trust and Company Loans

Yes, many lenders will consider lending to discretionary trusts.

However, lender requirements can vary significantly. Most lenders will require the trustee to borrow on behalf of the trust and may also require personal guarantees from directors or key beneficiaries.

For example, an investor purchasing a $1.2 million investment property through a discretionary trust may have access to fewer lenders than if they were borrowing in their personal name, but specialist lenders often have well-established trust lending policies.

Not necessarily.

Some trust loans are priced similarly to standard residential investment loans, while others may attract different pricing depending on the lender, loan size and transaction complexity.

In practice, lender policy often has a greater impact than interest rate alone. A lender that properly understands trust lending may provide a better overall outcome than a lender offering a slightly lower advertised rate.

It depends on the structure and source of income.

Some lenders assess trust distributions received by individual beneficiaries, while others may review trust financial statements, tax returns and underlying assets.

For example, a trust receiving rental income from multiple properties may be assessed differently from a trading trust operating a business.

The structure of the trust and the consistency of income often play an important role.

Sometimes.

Certain lenders may consider retained earnings held within a company, particularly where the company has a strong financial history and the profits can be verified through financial statements.

For example, a business owner drawing a modest salary but retaining profits within their company may find some lenders take a broader view of overall financial strength than others.

Most lenders want individuals behind the structure to stand behind the debt.

Even though the property may be owned by a trust or company, lenders commonly require directors, trustees or beneficiaries to provide personal guarantees.

This provides additional security and accountability for the lender.

Potentially.

A newly established trust can often borrow provided the structure has been properly established and the guarantors meet the lender's servicing and credit requirements.

For example, many investors establish a trust shortly before purchasing their first investment property.

The trust itself may have no history, but lenders often assess the strength of the guarantors supporting the application.

Not always.

Borrowing capacity is usually influenced more by income, liabilities and lender policy than the trust itself.

However, some lenders take a more conservative approach to trust income or trust-owned liabilities, which can affect borrowing capacity calculations.

This is one reason lender selection becomes particularly important.

Potentially.

Some lenders offer higher LVR lending to trust borrowers, while others require larger deposits.

For example, one lender may consider a trust purchase at 90% LVR, while another may cap lending at a lower level.

Available options depend on the structure, property type and overall application strength.

Yes.

Trust-owned properties can often be refinanced for various reasons, including interest rate review, debt consolidation, equity release or restructuring existing lending.

For example, an investor may refinance a property that has increased in value to access equity for a future acquisition.

Lender requirements will vary depending on the trust structure and purpose of the refinance.

Yes.

Trusts are commonly used when purchasing commercial property.

For example: Medical Centres, Childcare Centres, Warehouses, Office Premises, Retail Properties.

Commercial lending generally involves different assessment criteria from residential investment lending, including lease arrangements, tenant quality and property type.

This is usually a legal and taxation decision rather than a lending decision.

The appropriate structure depends on your objectives, existing assets, family situation, business interests and long-term investment plans.

For example, an investor building a substantial portfolio may have different considerations from someone purchasing a single investment property.

Independent legal and taxation advice should always be obtained before deciding on an ownership structure.

Choosing a structure first and investigating lending options later.

For example, investors sometimes establish a trust based purely on taxation discussions without understanding how lenders will assess the structure.

A better approach is to consider both lending and taxation implications before committing to a strategy.

Potentially.

Many experienced investors use trusts and companies as part of a broader investment strategy.

For example, investors planning multiple acquisitions may consider ownership structures, equity strategies, borrowing capacity and succession planning together rather than treating each purchase as a standalone transaction.

The structure itself does not guarantee better outcomes, but it can form part of a longer-term strategy when combined with appropriate professional advice.