Hi
Can anyone tell me what extra fees are charged by a lender when a purchase is made through a hybrid trust?
I want to borrow in my name but the security will be held by the trust.
I think I’ve read that guarantor’s fees apply, as well as extra legal costs for reading trust docs etc.
How much for these and any others can I expect? Interested in ANZ and St George mainly.
Also any brokers here that have actually done these kind of deals?
Thanks
MumaNone usually. However some banks may want you to get independent legal advice, which means you will ahve to go to a solicitor and listen to them explain you will be personally liable for any debt you guarrantee. approx $50 – $150.
Some banks also want to charge you an extra legal fee for their legal people to review your trust deed. approx $150.
However, I have had many loans ATF my trusts (discretionary) and have never been charged any extra. I also have clients with Hybrids and beleive that they have not been charged any extra either.
Terryw
Discover Home Loans
North Sydney
[email protected]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
Robert
Are you aware of the situation with Hybrid trusts, or trusts generally? Any trustee can have the loan in their individual name. With hybrids the person is borrowing to buy the units in the trust, so the loan must be in their name not the trust name. This is to enable the borrower to claim the interest from their personal income.
Muma, please feel free to contact myself for any questions you may have.
Tom Murphy
Mortgage Adviser
If I can’t do your loan no one can.Rob
I have done a few loans thru bankwest for Hybrid trusts. I have also used one other lender – can’t remember who at the moment. Tonto will also do them, and many other I imagine.
Most lenders will also lend to the trustee. I have a few of my loans in my name without mentioning my trust.
Terryw
Discover Home Loans
North Sydney
[email protected]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
Rob
The loan is in the investors personal name and the Trust provides a guarantee (the guarantee provides the security).
This is also a good structure where two investors are purchasing a property together. The property is owned by the Trust and each investor gets a loan in their name for their share of the debt only. The Trust provides a guarantee (and the other investor must consent to this guarantee) for the security. This is a perfect structure because it doesn’t destroy the investors borrowing capacity because they are only liable for their share of the debt and not the whole debt. I have seen Westpac accept that structure.
I have client that has this arrangement with Heritage also.
Cheers
Stu
Thanks for your post Stu. I had no idea that could be done and will have to look into it.
Rob when buying things for the trust, you buy in the trustee’s name which is your own (if trustee). You then just get the loan in your name as well. So title is in your name and loan is in your name. Confusing the first time. I remember the first time I bought as property as trustee. I told my conveyancer I wanted it in the name of the trust, and couldn’t udnerstand it must be in the trustee’s name.
Terryw
Discover Home Loans
North Sydney
[email protected]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
>>I told my conveyancer I wanted it in the name of the trust, and couldn’t understand it must be in the trustee’s name.<<
A company can also act as trustee of course.
Pisces
Hi Rob
The lender still takes the first mortgage over the property but this is taken through a guarantee (provided by the trust). Therefore, the loan is fully secured.
This is similar to St George’s Family Pledge loan where parents can provide additional security via a guarantee.
Cheers
Stu
Rob
I understand what you are saying however perhaps they make an exception where family trusts are concerned. Perhaps they “look through” the structure to realise that the trust and individual are essentially the same people. Maybe if there is a relationship between beneficiaries and the individual (i.e. same people) then they are happy.
I don’t know what there thought pattern is but there is no question if it can be done because I have had clients do it.
Cheers
Stu
Rob, a guy I got to know through some seminars I attended always purchased property in the Unit trust – which then guaranteed/provided the security for his wife (higher income earner – tax advantages) to borrow the $$ to buy units in the trust.
I know that Citibank was one of his lenders, but I don’t recall any others….. He bought at least 20 odd properties under this structure.
Cheers
Mel
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