Buying property through a trust or company
Accountants recommend structures for good reasons, asset protection, tax planning, succession. Then the structure meets a lender, and the borrower discovers that a trust application is a different animal: more documents, fewer willing lenders, personal guarantees regardless. All workable, provided the lending is planned with the structure rather than after it.
How lenders see a trust application
The trust (through its trustee) owns the property and borrows; the people behind it guarantee. Lenders assess three layers at once: the trust deed, read in full for the power to borrow and mortgage, with unusual clauses triggering requisitions or declines; the trustee, personal or corporate, with corporate trustees now the common preference; and the guarantors, the directors and often the adult beneficiaries, whose personal income and position carry the serviceability assessment. The structure holds the asset, but people always carry the loan.
Discretionary, unit and company
Family (discretionary) trusts are the most common vehicle and most lenders on a broad panel will lend to them, though policies differ on how trust distributions count as income. Unit trusts appear where unrelated parties invest together, and lender appetite thins. Buying in a company directly, without a trust, is usually the simplest of the three at assessment, at the cost of losing the CGT discount that individuals and trusts can access. Which structure is right is your accountant's advice; what each structure does to the lending is ours, and the two conversations belong together, early.
What to have ready
The full executed trust deed with any amendments. The corporate trustee's details and ASIC extract. Tax returns for the trust and the guarantors, typically two years, with one-year options at some lenders where the structure is new. Evidence of how income flows: distributions, director salaries, retained profits. And clarity on the deposit's source, because money moving between personal and trust accounts needs a clean paper trail.
Where these applications go wrong
A deed without borrowing powers, discovered at assessment. A lender chosen for its advertised rate that quietly doesn't lend to trusts at all, the application dies late and expensively. Distributions counted as income by the borrower but not by the lender's policy. Negative gearing benefits assumed inside a discretionary trust, where losses are generally trapped rather than offset against personal income, a tax conversation that should have happened first. And timing: establishing the structure the week of the purchase, when deeds, ABNs and bank accounts all have lead times.
Simplified for illustration, your deed, trustee arrangement and guarantee requirements are confirmed in assessment, with your accountant and solicitor in the loop.
Trust and company borrowing questions
Do all lenders accept trust applications?
No, a meaningful slice of the market doesn't lend to trusts, and among those that do, deed requirements, acceptable trustee arrangements and income treatment all differ. That's the practical reason trust files start with lender selection rather than a rate comparison: the sharpest advertised rate is irrelevant at a lender that will never assess the file.
Will I get the same rate as borrowing personally?
Often close to it, many lenders price trust lending on the same investment-loan books, sometimes with a modest loading or higher fees for the extra assessment work. The bigger financial differences usually sit in the tax treatment and land tax position of the structure itself, which is exactly why the accountant belongs in the conversation before the contract.
Can my trust borrow if it has no income history?
A newly established trust with no history can still borrow, the serviceability comes from the guarantors' personal income and the property's rent, not from the trust's trading record. What the lender needs is the structure documented properly and the people behind it strong enough to carry the loan.
Am I personally liable if the trust borrows?
Almost always yes, lenders require personal guarantees from directors and frequently from beneficiaries, so the asset-protection benefits of the structure don't extend to the loan itself. Anyone told otherwise should read the guarantee documents closely and take independent legal advice, which lenders generally require anyway.
Should I set up a trust just to buy an investment property?
That's a tax and legal question for your accountant and solicitor, not a broker, structures carry establishment costs, ongoing compliance, land tax differences and the trapped-loss issue, alongside their protections. What we contribute is the lending consequence of each option, priced, so the structure decision is made with the full picture rather than half of it.
Related guides
General information only, not credit, tax, legal or financial advice. Structure selection is a matter for your accountant and solicitor; lending through structures is subject to individual assessment, deed review and lender approval.
Bring the deed. Or bring the idea.
Twenty minutes with Charles, before or after the structure exists: which lenders suit it, what they'll require, and how the lending and tax conversations fit together.
Prefer a callback?Charles calls back within one business day. No documents needed yet.
