we signed the contract on the 17th of May to purchase a property and formal approval took over a month as my husband just started working under his ABN in march and i resigned my old job in april and started working at my new job on 25th of may with a 3 month probation. It was stressful but eventually came through. 95% loan plus LMI. Overall its been a good experience if not for the mortgage broker who had little or no experience financing a property purchased under a trust structure with company as trustee. Settlement is on the 12th. Our building inspection report is satisfactory except for a smoke alarm that needs a new battery.
Jnb, Im thinking of opening a trust with a company as trustee, Do you find it complicates things? Everyone i talk to says its really complicated. My only problem is i have already purchased the property so i don't know how hard it will be to put them in the trust.
Jnb
Please explain a bit more.
I’m extremely interested in this subject.Please tell us a little bit about the benefits and down sides. How much did it cost to setup etc
Thanks in advance
Setting up a trust wasn’t very difficult. Just make sure you get a professional to do it at least the first time for you. It cost me 1650. We set up a family trust with a company as trustee with my husband and I as appointees of the trust and beneficiaries. We then set up another trust that was the share holder of the company for asset protection purposes.
We then went ahead and contacted a mortgage insurer who went through our finances and said we had the serviceability and could get a 95% loan. The next day I went ahead and put an offer on a 2-1-1 property I have found close to the city and was an urgent sale by the owner. It had reno potential. The only draw back was that it was a starta unit with start fee of around 350 a quarter and rates 1800 per year. Pricefinder said that it was worth 345k and after negotiations we purchased for 310k. It is currently rented at 320. I plan to reno the kitchen which is really bad and rent it for 350.
Home loans asked for about 6 pay slips from my husband and accepted just the one from me. We came up with a 5% deposit and 9k stamp duty and they added 6k LMI to 294k loan.
One of my friends purchased with Homeside it was being processed by another mortgage broker. It was quick and swift. The same broker had helped him get a loan through Homeloans the month before and the process took more time. So I am going to go with Homeside with my next purchase in 2 months time. We plan to set up another trust and a company for the next purchase but the share holder company remains the same. This time we will buy the trust deed and company online and get the accountant to go thru it.
Hope that helps.
Thanks jnb, is it necessary to setup a new trust for each property. I thought you could have multiple properties under one trust?
jnb
Thanks for your reply.
Would you suggest any books regarding the corporate/trust setup and the taxing on the corporations that I can educate myself before I talk to an accountant?Thanks again
Found this info regarding the trust setup:
http://www.propertybooks.com.au/family_trusts
Apparently it is not suitable for my case.
I'll dig more…No not necessary to set up a new Trust for each IP and whilst there is no maximum number you can have in any 1 Trust i try and make each of our 5 Trust have equal value of asset.
Some lenders will not want to cover Corporate Trustees in their Pro packages or want to discount their applic fees or interest rate but on the other hand there are a few lenders who will treat such loans the same as though if you were buying in your own personal names.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Thanks Richard, could you email me a copy of your API interview (0-40 properties in a decade) [email protected] been meaning to ask you for a while but keep forgeting.
Just had to read your post couple of times to get the full gist of it………and with the double employment changes, going to contracting/self employed, and on probation all while buying property I'm actually thinking your broker (and the lender) deserve some sort of award! Glad it all worked out.
Cheers, and enjoy!
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