Hi everyone, I am thinking of buying an investment property – a block of 6 units in one title with another 3 friends. We have decided to set up a Unit Trust with a Corporate Trustee. There are 4 Family Trusts being the Unit Holders of the Unit Trust. However, all the bank and the brokers that we have talked to think that the structure is too complicated and therefore only offer us the Commercial Loan with LVR of 70% if we want to use that structure. Only one bank agrees to lend us 80% of the purchase price at the Commercial Rate if we agree to use Discretionary Trust in stead of Unit Trust.
As I have mentioned, we are 4 friends, not related in anyway. Using the Discretionary Trust is quite risky in this situation. Not that we don't trust our friends but what would happen if someone want to be the bad boy in the future. Also, Discretinary Trust does not work for Land Tax (NSW). So I am just hoping any one here have experienced the same situation can you please give us some advices? Or if you know any broker/banks can help us to borrow under Unit Trust to buy a block of 6 units in one title without clasifying the loan being the Commercial Loan, please let me hear it?
Thanks all in advance for your advice/recommendation.
Andrew
Major banks are usually OK for a standard investmet loan in a unit trust however you might need to apply via business banking.
In most cases you need to go direct :- not through the broker channel.
Most lenders thru the Broker Channel also would have no issue lending to a Unit Trust.
Your set up is common with many clients so nothing unusual there.
Richard Taylor | Australia's leading private lender
CBA and Westpac are won’t do this via broker channel / retail bank.
Really just did a 6 pack of non strata brick units thru CBA only last week.
Richard Taylor | Australia's leading private lender
Thanks all. May be we haven't talked to the right person. I will try to contact CBA next week.
@ Banker: We have talked to Westpac. They have no problem lending to Individuals for the block of 6. However, if we want to buy under the Unit Trust name, they will classify the loan as Commercial Loan with commercial rate and only lend 70%.
@ Richard: Do you mind telling me whether the loan you obtained from CBA for the block of 6 was commercial loan or residential loan? Were you able to borrow 80%?Thanks.
AndrewQlds007 wrote:Really just did a 6 pack of non strata brick units thru CBA only last week.yes but I said broker / retail. Even if this is broker introduced it would have gone commercial / business banking (even if done on a home loan product). Most brokers are not commercially accredited and most that are don’t know how to package a commercial deal.
Not saying you don’t Richard-: point being most brokers struggle with business / commercial deals let alone reading a P+L or balance sheet.
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