Does anyone know of a lender that will lend to individual unit holders of a property trust, using the property owned by the property turust as security?
Here is the situation:3 siblings want to purchase a property for their elderly parents to live in. Commercial rent will be paid. It is anticipated that the property will be purchased in a property trust, with the indiviiduals contributing the funds required by purchasing units.
Want to keep the loans in the unit holders names for 2 reasons: 1, as the property is likely to be negatively geared to begin with, the individuals can then claim a tax deduction without these losses being quaratined in the trust, and 2, so that each unit holder can repay their loan as quickly or slowly as they choose.
Also, am I right in thinking that each unit holder would have to act as guarantor or joint lender on each of the 3 loans?
Thank you to anyone who can help me.
Cheers.
Hi Jacqui
There are not many of them but Yes their is the odd lender out there that wont have an issue subject to the overall LVR.
You are however correct that each individual loan split will be in all 3 names however you can allocate the account numbers to each unit holder. Of course all parties will still be Jointly and Severally liable for the entire borrowings.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Jacqui;
nab did it for me back in 2005. I set up a hybrid unit trust and I personally borrowed the funds and the building in the Trust was used as security. I had originally wanted to use a Hybrid discretionary trust but my solicitor guided me away from that. He set it up so that all the income units flowed back to me plus most of the capital units.My bankers were comfortable because I had a track record with them and I had other property loans with them. It was a great move because I prepaid interest only a year in advance and so was able to extinguish a capital gain in the same financial year.
About two years after purchasing the property the ato came down on discretionary hybrid trusts like a ton of bricks. I was very lucky that I had obtained such good legal advice.
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