Hi
I read with interest in Steve's book 'From 0 to 260+' page 154 that Steve uses a trust structure and as guarantor can secure himself multiple loans and thus control more property than if the borrowings were in his name only. Could someone explain how this works?
I tried looking for the Wealthguardian mentioned in the book but seems it is unavailable.Out of date info.
Having a trust does NOT increase your borrowing capacity.
Regards
MichaelMick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone MeSame Banks. Better Rates. Served With a Passion.
What Michael said.
It's surprising how often this comes up though. We get asked it quite frequently.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Thanks Michael and Jamie.
As the boys have said with only provision being if you hold multiple properties in Trust then as part of a property business then 100% of the net profit will be taken into consideration.
May of course work against you but can beat 80% which is the norm with most lenders.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
There is also the argument that as the trust is a discretionary trust (in most cases) the trustee of the trust has discretion as to who to distribute the income of the trust to. Therefore there is no guarantee that the trustee is going to distribute anything to you, the loan applicant or trustee or guarantor. So having a trust could actually hinder your borrowing capacity.
I have never seen this line of argument used by a bank though. They will generally consider the past performance of the trust and assume this will continue.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Yep good point Terry and agree.
Never seen a credit decision go that way but i guess anything can happen with some of the things i hear at the moment.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Anster,
I have just finished reading his revised book to and it still states the same as you mentioned maybe the whole book should be updated.
Jpcashflow | JP Financial Group
http://www.jpfinancialgroup.com.au
Email Me | Phone MeYour first port of call in finance :)
My understanding is the book makes reference to having multiple trusts (with corporate trustees) borrowing from different lenders.
The difference I believe is going to one bank and asking to borrow $450,000 in your own name, versus going to three different banks and borrowing $150,000 in each of three seperate trusts (and giving your personal guarantee to each seprate trust).
I believe the book also makes reference to this being a bit of a grey area… as it relies on the different lenders not picking up (and factoring in) your other personal guarantees… not sure I would recommend this strategy, however would love to hear others input.
I am not aware of any lender that does not ask you to declare any other loans which you guarantee.
Even if they dont specifically ask the question i think you would have a duty to declare it anyway.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
It would also show up of the credit report of the individual who is guaranteeing the loan.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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