Mortgage Broker Question...

From: Alan Hill


If purchasing a property through a Trust Structure, are there any negative factors to be aware of with Lenders?

For example, I have no doubt they would require various extra documentation etc. but does it have any ramifications on the Lend itself? eg. Could it reduce the amount that could be lent, serviceability requirements, eligible property types etc etc or is it really just a straight doco overhead?

:)
 
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Reply: 1
From: Rolf Latham


Hi AH

Trusts are OK with most lenders.

Westpac dont like em, most of the others are ok. Some will charge say a 300 trust deed review fee and 200 security preparation charge etc etc.

Generally, because the loans are still guaranteed by either the trustee and/or the the directors of the corp trustee, the service issues are the same, and the mortgage insurer sees it that way as well.

Ta


Rolf
 
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Reply: 1.1
From: Alan Hill


Thanks Rolf.

When you say Westpac 'don't like em', what do you mean exactly?

Are we talking about a 'grumble' or actual ramifications to lending criteria?


:)
 
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Reply: 1.1.1
From: Fiona H


And while we are on this subject, I'd love to know the tax adv / disadv of buying in a trust. (I realise they can be good for asset protection).

We set up a trust a while ago, with the intention of buying our next IP through it. We havent because I heard that you cant distribute a taxable loss from the trust, it carries over to be offset against future income. This negatively affects your cashflow and as I see it, you will need to make regular cash injections into the trust.

Cheers
Fiona
 
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Reply: 1.1.1.1
From: Gordon Austin


Fiona,

If you do a search on "trusts" you will find a hoard of information on this. Unfortunately there is the loss of negative gearing benefits in the shorter term but hopefully over the long term the tax benefits should be there. We are in the process of getting a trust setup ourselves and trying to come to grips with these issues.

Gordon
 
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Reply: 1.1.1.1.1
From: Mark Laszczuk


Fiona, see my reply to your post below.

Mark
'no hat, some cattle'
 
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