In the eyes of the banks

Hi All,

Scenario:

Person A is the sole director of a corporate trustee with a fixed unit trust (in which she owns all of the trust units).

The unit trust owns properties in which the "borrower" is the company but she provided personal guarantees for each of the bank loans.


When she applies for finance to purchase another property in her own name, would the corporate trustee's loans (in which she personally guaranteed) be visible to the banks eyes? Or are they seen as loans for a totally separate entity?

That's assuming this positive credit reporting is in place by the time she applies for the next loan.

Thank you.
 
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some lenders will make them disapear, ie their policy is to ignore contingent liabilities such as directors guarantees IF the corporate entity can meet its own financial needs

ta
rolf
 
Hi All,

Scenario:

Person A is the sole director of a corporate trustee with a fixed unit trust (in which she owns all of the trust units).

The unit trust owns properties in which the "borrower" is the company but she provided personal guarantees for each of the bank loans.


When she applies for finance to purchase another property in her own name, would the corporate trustee's loans (in which she personally guaranteed) be visible to the banks eyes? Or are they seen as loans for a totally separate entity?

That's assuming this positive credit reporting is in place by the time she applies for the next loan.

Thank you.

Person A is still liable for the trust's/company's loan...and Some banks may not even take in the rental income or distribution from the trust's/company's loan unless you have 2 years tax returns as well! ( some exceptions to this depending on the bank).

So potentially you take in full liability with no income/negative gearing benefits- from a bank's point of view.

This is a common question/problem especially for investor who uses trust to buy....they buy 1-2 IP under a trust and than will it comes to buying their own PPOR under their own name - BAM! serviceability issues ...there are ways around this but it's a bit complex to type it up in a forum.
 
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