Trust Question

[grizzly]

Hi All,
I'm married with 2 small children-6 and 3 and have a PPOR mortgaged.
Before I start investing I want to set a up a trust for 2 Ips.
I know that capitalising interest is a bit sus at the moment but
presuming you could do it- capitalise the interest on the 2 IPs
and direct all the income into your PPOR mortgage.
With a hybrid discrentionary trust can you still distribute the income
through the trust and direct it into your PPOR mortgage therfore paying off
your own house much faster.
I hope I explained my question properly.
Thanks All
Grizzly

[Mike]

Hi Grizzly,

Forgive me for saying this but I find your question rather strange because your concern seems to focus more on whether you can distribute income through a Trust (which is a well-known feature of Trusts) rather than the issue of interest capitalisation which is less certain.

It is my understanding of these Split Loan schemes that you are still dealing with one loan. Since a Trust is a separate entity this arrangement would not work, in my opinion. Furthermore, a Trust can buy two investment properties but the Split Loan scheme is designed to work with one investment property and the PPOR. I don't think that any property bought through a Trust can be technically considered as a PPOR.

Regards, Mike