Borrowing in trust/company

[Blueberry]

If i am to set up a trust or company structure, am I (as an individual) still on the loan documents? Do I have to essentially go guarantor for the loan and give all my financial details to the bank. Say if I was wanting to set it up for my young daughter, who has no income.

If I had a say 50% deposit, which was in trust and held by the bank, would that change things?

 

[Terry_w]

If i am to set up a trust or company structure, am I (as an individual) still on the loan documents? Do I have to essentially go guarantor for the loan and give all my financial details to the bank. Say if I was wanting to set it up for my young daughter, who has no income.

If I had a say 50% deposit, which was in trust and held by the bank, would that change things?

A trust is just a relationship and not a legal entity so the trustee would be borrowing. If the trustee is an individual then the individual's name will on the loan documents and mortgages. If a company then the company will be the borrower with the director(s) as guarantors.

All lenders for residential loans will ask for guarantees usually. I recall one smaller building society which indicated they will not need guarantees if the LVR under 60% but I have never used them

 

[Paul@PFI]

Also depends on type of trust and how its structured.

Asking a bank to hold a security deposit / bond as additional loan security may be refused by many banks as it could jeopardise the trust deductions if its not capable of being drawn / released. Its a form of non-recourse loan and bank lawyers try and avoid those arrangements as they know the ATO don't like them. I wont get into details but the $ deposited could be a scheme to inflate a tax deduction for re-borrowing your own $. Bank lawyers would likely baulk at the idea.

You need to discuss finance options for a trust with a broker. Fewer lenders, LVR and other conditions etc. That said as long as its not a hybrid its not that daunting.

Trust needs to be +ve geared for tax purposes or losses get trapped in the trust. Depreciation etc need to be checked and managed.