Hi everyone
This is my first post in this forum and very nice to meet you all. So far, I have definitely benefited a lot from reading a variety of posts in this forum and I hope I can also provide some valuable contribution back to this forum.
I am relatively new in the game of property investing and I would appreciate if you could answer my question in relation to financing.
I would like to set up discretionary trust to purchase my investment property. However, my bank tells me that income from discretionary trust will not be taking into account when calculating my serviceability of the loan, because this is a discretionary income.
How do you borrow more money from the bank if most of your income is coming from discretionary trust? Any suggestions will be greatly appreciated.
Thanks
Rick
Most banks will take the trust income into account. You should use a broker.
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
Hi Rick
That does not surprise me.
I never fail to get amazed at the lack of quality information given to iinvestor clients by Banks / Bankers. Most of them have no clue when it comes to loan structuring.
Some lenders do not offer their full suite of products when a Discretionary Trust is involved so a Broker will be able to give you a variety of options.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Thanks guys, sounds like a mortgage broker is the way to go.
Rick
Rick
Most of don't charge a fee as we are remunerated by the lenders with whom we deal with so cost you nothing for our service.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
One thing that has always concerned me is the level of knowledge or lack of knowledge amongst bank staff when it comes to investments and trusts.
Like Richard and co have said i would always use a broker in this instance to ensure you get the correct advice or opinion
Technically the lender is correct to refuse to take into account the trust income. Because the trust is disrectionary in nature there is no guarantee that the trustee will make a distribution to the same person each year, and if they do it may not be the same percentage of the trust income. This is the case if the individual is the trustee and/appointor.
But in practice I have never encountered a problem and this has in fact never been raised with me once by a lender in my 13 years as a broker.
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 had Nab on a commercial deal want to trust to be a guarantor for this very reason. I think its not required in practicaity ie if the beneficiaries are giving personal guarantees why should the bank care about the trust not distributing the income. At the end of the day they are lending the person the money really not the trust otherwise why would they allow a 2 days old trust to borrow money.
Marty McDonald | Mortgage Experts
http://mortgageexpertsonline.com.au/
Phone Me
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