Hi guys
Just a few quick questions.
1. I have decided to go with financing with ANZ because I am currently with them and will be able to roll my loans all into one.
I am buying a property with a partner, we are going to buying it through a tenants in common arrangement as a partnership of trusts.
I wanted to have corporate trustees, however, the financier informed me that lending to corporate trustees will fall under commercial lending rules for ANZ and that I will be hit with a much higher interest rate.
One thing he suggest I could do was make myself an individual trustee, borrow the money in my name as trustee and then 6 months down the track change trustees to a company – I was wondering has anyone done this? Is it a bit dodgy?
2. Since we are going to be purchasing this property as tenants in common, what do I actually put on the property title?
Will it beTrustee 1 as trustee for Trust 1 and Trustee 2 as trustee for Trust 2 as tenants in common?
Would changing trustees cause an issue with this since the property title will have me as the trustee for the trust rather than the company?
Any help would be fantastic.
Thankyou.
Binscab
Better get advice from a lawyer, rather than a banker.
Changing trustees is not a simple matter if there are properties and loans involved. As the bank guy if you will have to reapply for the loan again – which i think you will because the legal ownership has changed. This will put you back into square one.
Then look into the stamp duty issues – depending on your deed and State you may be up for stamp duty again.
for 2. Trusts are not put on title. It is just the names of the trustees. So Smith and Jones as tenants in common. If you change trustees, then you will need to change title deeds to XYZ Pty.
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
for NSW re stamp duty, look at s 54(3)
http://www.austlii.edu.au/au/legis/nsw/consol_act/da199793/s54.html(3) Duty of $50 is chargeable in respect of a transfer of dutiable property to a person other than a special trustee as a consequence of the retirement of a trustee or the appointment of a new trustee, if the Chief Commissioner is satisfied that, as the case may be:
(a) none of the continuing trustees remaining after the retirement of a trustee is or can become a beneficiary under the trust, and
(b) none of the trustees of the trust after the appointment of a new trustee is or can become a beneficiary under the trust, and
(c) the transfer is not part of a scheme for conferring an interest, in relation to the trust property, on a new trustee or any other person, whether as a beneficiary or otherwise, to the detriment of the beneficial interest or potential beneficial interest of any person.
If the Chief Commissioner is not so satisfied, the transfer is chargeable with the same duty as a transfer to a beneficiary under and in conformity with the trusts subject to which the property is held, unless subsection (3A) applies.
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
Thanks Terry, I will speak to a lawyer regarding this.
I'm located in South Australia.
I've never changed title deeds before, will this cause a headache if I decide to go through with this?
It is the only way I can think of to hold the property in a trust with a corporate trustee as the other avenues I have covered are:
Me borrowing the money and lending it to the trust (the bank won't allow that because the mortgage is over the property which has to be in my name)
Hybrid trusts (told to stay away)
It's rather pointless having me as a trustee and holding it in there isn't it? I may as well hold it in my own name as joint tenants?
Thanks
Scab
changing trustees will be painful.
It is much easier to have a company as trustee. then you will just need to change directors if you need to change control. No need for title changes etc.
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
Thanks Terry.
I was advised by the financer that having a corporate trustee will get caught under commercial lending.
Are there large banks who will lend to a corporate trustee at individual mortgage rates?
If not then I will have to rethink my strategy about how to set this up!
Thanks for all your help.
Scab
In the good old days it wasn't a problem. These days it seems most loans in company names go to the commercial section – not sure on the consequences for rates, but they generally are more picky about what information they require.
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
It would be less hastle to change banks. Westpac has some issues round company as trustee as well:- they can do it however it’s out of policy and you need to go direct to someone that can print docs (their doc prep team in SA don’t do trust contracts:- contracts for brokers nationally are printed in SA).
CBA would do the deal not probs:- company trustee is fine for retail loans at CBA.
Nab: – I’m not sure. They have alway struggled with retail lending so I would try them last…
Thanks for your help guys.
The main reason for me wantign to stick with ANZ is because of the 0.7% below market rate they offer on variable loans.
I will ask CBA if they will lend to a corporate trustee using retail loans.
Thanks
Andrew
NAB are a bit difficult too. My manager can't do them, company loans have to go to the commercial guys. Same with Westpac, no idea with CBA sorry, but it is worth a shot.
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've just shot a query through to them, waiting an answer now.
Gosh they are really making it hard to hold property in the company trustee structure aren't they?
I just heard back from CBA they said yes!
Hoora!Bad thing is their wealth package is only 0.5% discount oh well it is worth 0.2% sacrifice!
will save you more than 0.2% in hassle later on.
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
Thanks for all your help guys!
This has saved me HEAPS.
If you shoot me a private message I’ll reply with a CBA contact for you. If the title is in the name of two companies as trustee/ tennents in common- you don’t want a vanilla call centre or branch manager…
Keep an eye on the fees. You will pay additional guarantee fees of $200 per borrower and a $150 settlement fee. If you take the wealth package (350 p/a) this will not cover any accounts in personal names. You might find your self better on the economiser. It has nil monthly fees and the manager can waive the 600 app fee.
Cheers Banker!
My business partners sister works at CBA and she has organised a lender to come out tomorrow to us.
If I find he is 'vanilla (hehe I like this term)' I will send you through a message!
On the website it's saying that there is no upfront establishment fee or loan service fee.
The only fee it brings up is the annual fee of $350 like you stated.I have found the economiser loan on the website also, thankyou for bringing this to my attention and will ask the lender about it tomorrow!
If he is coming to see you, then he is probably a 'vanilla' person – a mobile manager
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
When you have trusts it’s a bit more complicated:- even the people makin the fees up are not that smart. I did one with 6 guarantees and we were charged $200 for one guarantee fee because CBAs guarantee fee is per borrower not per guarantor; as strange as it is.
They might also try a trust vetting fee which is where they have their legal team view the trust deed to make sure the trust is able to borrow;
Ask the following;
1. Do the trust deeds need to be sent to legal; if so at what cost?
2. Re 1. Is it two fees due to two trusts
3. Do you need to pay guarantee fees
4. Can they waive the app fee on the economiser ; $600 (take the 3 year initial discount; no monthly fee for the life of the loan)Come back after the meeting and give us an update…
Banker
Cheers Banker.
Will do!!
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