Hi Everyone
I am keen to know what people are doing out there where you buy property held in a unit trust so borrow thru a trust company and providing personal guarantees.
The last four deal I have done (three thru WBC and a the current one SBG) I have had nothing but 11th hour snags where processes fall down within the banks from forgetting to order vals to saying you have approval but comming back and putting conditions on them, to just taking months to complete refinancing or new buys loosing me time, money and opportunities.
I'll admit my structure is not simple like a person buying an IPL in their name, but I struggle to understand how they consistently get it wrong and I cannot be sure of the reasons.
I have used the same mortgage broker for many years. These issues only started when the trust started. Four deals, four nightmares. After the last debarcle, which I started over two months ago, and where just at the stage where the loan docs might actually get raised today.
I feel I am goign to totally review my approach to financing deals after being assured that SGB was a a lot easier to deal with in regard to this structure.
I am tempted to build a direct relationship, but have found it very handy having an MB handle, but perhaps he is part of the issue? Perhaps it is the two banks?
On this ocassion we attempted to make sure all bases where covered, but still three 11th hour glitches with more information requested and new conditions set by the bank compared to what was advised up front. I was told to do one thing to ensure conditional approval, and once that was done, there was more requests! This should have been covered off weeks ago if these were issues, as now this causes painful delays. This could be attributed to the current credit crunch, but I do not know, and the bank is not likely to explain!
So for those of you borrowing thru a similar structure I'd really appreciate your comments on what you do and who you use, and how you find it, as this may help me to avoid a fifth debarcle in a row! Perhaps this is just normal, but I find that hard to accept. I think most deals should be able to be assessed and approved subject to valuation within a few days not a few weeks or a few months.
I am located in Brisbane work wise but about to relcoate residentially to the Runaway Bay area in December.
Cheers
SimonNeither WBC or SGB are great lovers of UT structures mainly because they dont understand them.
Be even more fun when Wotpac own the Dragon.
Regretfully both lenders have centralised credit departments so building a relationship with the Bank will do you absolutely no good at all as the decision making is made elsewhere.
Richard Taylor | Australia's leading private lender
I have found SGB to be one of the best when dealing with trusts but not so with westpac.
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
Terry, now the Dragon has closed its underwriting department here in Brisbane and sends everything South maybe we might find someone who can understand a Trust structure.
Richard Taylor | Australia's leading private lender
Richard/Terry
Do either of you find any lender has an understanding in this area that allows deals to flow? I am always being delayed with time consuming credit referals up to chain, before finally getting approved. It simply limited the deals I can do each year. Worst case was 11 weeks thru westpac in 2006. My latest deal thru SBG was approved yesterday. I started that process on 21/8!
Cheers
SimonSimon
It all depends on the deal itself.
Very few lenders have staff that can approve a deal without having to go the credit or assessment department for a decision.
If the application is as mentioned in the name of a Unit Trust many lenders will struggle with the concept.
Some lenders have specialised credit managers who process Trust and Company application who are usually mroe senior staff.
Personally i find dealing with the likes of Westpac worse than a trip to the Dentist. The Dragon is just behind them with credit normally wanting copies of your grandmothers credit card statement or a list of your nephews friends for a reference.
Dont normally have much problem in deals flowing but it all depends on the complexity of what you trying to get approved.
Richard Taylor | Australia's leading private lender
Hi Simon
I can't understand how it could take so long, unless documents were missing etc. Lenders do run slow sometimes, maybe a week to look at non-urgent deals etc. 2 months is a long time!!!!
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
Roaring about the dentist/WBC comment, how I can relate! SGB wanted my last three years tax returns to verify some personal rental income was really being declared! This after week 6. There were other streams and requests from the first week. My arguement, why not ask for it all up front to save time. How can it be week 6 before you ask for this! We all win this way, bank get interest earlier, I get settlement and onto the next deal!
I just think its down to inexperience and why I am searching for a lender that has the experiece and can give me the CRM I am looking for. Some of the people you cannot understand. Call centres overseas speak better english.
I think my deals are run of the mill. Borrow no more than 80% of val , I am buying or developing land in areas that are metro growth corridoors. Supporting by good rental returns and other income within the trust and outside it by the guarantors. Sometimes the settlement is paying out a loan i.e. land content, but its fairly basic in my opinion, none of its rocket science.
I guess I will keep searching as the next deal is going to be refinancing this loan and another with WBC as all this group are going to keep is my mortagage and tranactional banking accounts. The can handle that fine. For what I pay em in interest I keep a couple of people in jobs! They must be servcing scores of people poorly and while only a small drop in the ocean to them clearly, I'll move on to the next institution and episode!
Cheers
SimonHeya,
From my recent experience, it has largely depended on the credit officer at the organisation – not the organisation itself. I have had simple deals saved by the skin of my teeth through ANZ, then what I would consider quite complex deals sail through when I expected issues.
While it could be your MB, it is just as likely to be SGB, if the credit officer appears to be a 12 year old who has difficulty spelling their own name, let alone assessing someone's finance. (True story).
The most accomodating lenders for this type of thing seem to vary from State to State also – and BDM to BDM….
Although if anything can confuse a credit officer – a unit trust should do the trick….
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