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Applying For Your First Home Loan? What You MUST Know About The Pre-approval Process!

Applying For Your First Home Loan? What You MUST Know About The Pre-approval Process!

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First Home Buyers Guide To Obtaining a Pre-Approval Home Loan

When you apply for a home loan, the lack of a pre-approval may make you miss out on securing a home. While you will be out there, securing your mortgage with your lender, someone else – with a pre-approved home loan – can basically snatch your dream house from you.

Even if you put down a deposit for your home, you can still waste a lot of time when applying for a mortgage. Moreover, if that mortgage is declined, not only that you will lose your future home, but you may also say goodbye to your deposit.

This is why it is important that you know how pre-approvals work. As most people say, the world is moving fast, and you may have to move faster if you want to keep up. Therefore, today we’ll be talking about the process behind home loan pre-approvals.

What Is a Pre-Approval?

A home loan pre-approval is basically an initial assessment done by a lender and it shows you how much money you can borrow based on your financial position. A pre-approval is acquired by submitting a brief application in which you provide financial information that your lender will verify.

You may also come across what is known as approval-in-principle and conditional approval – these are two of the other ways that lenders may call pre-approval.

Advantages

With a pre-approval, it means that your loan has been pre-assessed by a lender/bank. It is valid for three to six months and it allows you to know the maximum purchase price for a certain property.

Moreover, getting a pre-approval also means that you know – for sure – that your personal situation meets the required lending criteria and you can shop around for your new purchase with not only confidence, but negotiating power as you know exactly how much you can spend.

Disadvantages

These are not necessarily disadvantages – after all, a pre-approval is more than recommended – but things that you should know after you get your home loan pre-approval.

First of all, even though you have been given a pre-approval, the bank/lender still hasn’t confirmed that they will accept your property as loan security.

Naturally, there may also be particular conditions that you have to meet for you to get your pre-approval. Moreover, it is known that you cannot rely upon all types of pre-approvals.

In short, a home loan pre-approval gives you an idea of how much money you can borrow. This is the first step to gain the trust of a potential seller – a pre-approval means that you are serious about buying their property.

It is also important to note that while your pre-approval is valid for 3-6 months, the lenders credit policy may change within this time frame thus, when you go to convert your application to formal approval, you may run into some unexpected issues. It is always a good idea to confirm with your mortgage broker the validity of your pre-approval and borrowing position, your broker should be up-to-date with lender policy and changes.

When Should You Apply for a Pre-Approval?

You should consider applying for a home loan pre-approval as soon as you are ready to purchase a property. At this point, you will have an idea of your price range, borrowing power, as well as of the areas where you wish to buy.

Basically, as soon as you start looking at properties and have the intention to purchase, you should apply for a pre-approval.

The Process Behind Home Loan Pre-Approvals

Pay attention to what you have to do in order to apply for and get a home loan pre-approval. This step can determine whether you’ll own the house of your dreams or not.

Finance Review

Before applying for a pre-approval, it is recommended that you look into your own finances. You will want to consider your usual expenses, your income, how much you currently owe in debt, as well as the assets that you own.

If you do this, you will have an idea of how much you can borrow before being assessed by a lender. Moreover, it is highly recommended that you also consider how much you can afford when it comes to monthly payments – as this is yet another aspect that may affect your borrowing power. Our brokers will also be more than happy to assist evaluating your borrowing position.

Type of Home Loan

After analysing your finances, it is time to decide over the type of home loan that you wish to apply for – investment vs owner occupied, fixed vs. variable. In the end, you should know which type of loan is fit for your needs however having a chat with our mortgage and finance brokers is always a good idea.

Applying for a Pre-Approval

Then, you will have to apply to your bank for pre-approval. Contact our office who will commence this process for you and match you with the right lender with access to over 60 different banks.

You will have to meet with your lender and assess the following things:

Credit Report – also known as your credit history. This is a record of your credit cards, loans, and any other credit products that you were subject to over the past couple of years. This record will include bankruptcies and defaults as well and will determine your overall credit rating – the latter shows your ability to pay back your debt in time.

Financial Situation – the lender will assess, once again, your current financial situation, and determine how much you currently own, as well as how much you owe.

Type of Loan – they will also review the type of loan that you wish to apply for. Together, you will determine if it is reasonable and favourable for you, taking into account your credit rating and financial situation.

The Bottom Line

At this point in our article, it goes without saying that applying for a home loan pre-approval is essential for your dream of owning a property.

You may not find the property that you want, or things may change in the very last minute. However, always keep in mind that a pre-approval can save you a lot of time and ultimately even secure you the house of your dreams.

Given that the process is rather simple, and you don’t need to go too much out of your way to apply for a home loan pre-approval, it is more than recommended for you to do so.

In case you still have any other questions or simply need more information regarding your loan or any other matters, feel free to contact us.

Our team of experts will guide you through the process of finding the best possible lender for you! Let us help you find the house of your dreams – reach out and contact us today! Contact us on 02 8530 1107 or submit your scenario online.

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We meet for a consultation, obtain your supporting documents and proceed to structure and package your application for approval knowing exactly what the banks want to see. We also monitor your home loan post approval ensuring you’re home loan suits you and your financial position

We get paid a commission from our lenders as a result of introducing your business to them. Subsequently, our service is at no cost to you. Our commission does not affect your interest rate whatsoever, if anything, we’re in a position to get you a lower interest rate than the general public due to our relationships with our banks

With our many years experience in the industry, we’ve been exposed to both easy and complex loan scenarios. Each loan we process gets presented to over sixty financial institutions, ensuring we have explored all options possible and are able to provide a solution

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Own a Business? Self Employed? What You MUST Know About Applying For a Home Loan

Own a Business? Self Employed? What You MUST Know About Applying For a Home Loan

Your Guide To Obtaining a Home Loan If You’re Self Employed

One in five Australians is self-employed. This means that there are quite some people here that are their own bosses and, in short, command over their very own businesses.

Of course, being your own boss sounds great and all, but there are a couple of things that may be uncertain for most self-employed people. For example, what do you have to go through in order to obtain a home loan?

Even though running your own business shouldn’t change your plans in terms of buying a house, it is worth noting that most lenders usually regard self-employment as having a higher risk.

Therefore, while you are not robbed of the possibility to get a home loan, you may have to take a different path than the employed Australian.

Things That You Need to Know

It doesn’t matter if you are self-employed or simply employed. When it comes to applying for a home loan, the most important thing is to be ready for it – irrespective of who applies for financing, all loans are assessed normally.

Financial Records

Just as with any loan, you will have to understand and adhere to the restrictions that come with a home loan, even if you are self-employed. You have, for example, to prove that you have a reliable income that you can rely on to manage your loan repayments.

Speaking of proof of income, this is where self-employed people may have to face different requirements. For one, you won’t be having a payslip to present to your lender.

When you are self-employed, lenders will most likely ask you for the last two years of business and personal tax returns, as well as for the income tax assessments. Naturally, lenders will use your declared taxable income when determining your borrowing capacity – not your gross turnover.

Therefore, you have to keep a good track of your financial records. As a matter of fact, you should do so as soon as you start being self-employed. Alternatively, having a good accountant will assist with bookkeeping.

Also, keep in mind that, if your financial records show large variances in income, you will have to explain these to your lenders. It goes without saying that you may be required consistent earning over the last two years if you want to get a home loan easier.

Low Doc Loans

Since you are self-employed, then you may have heard of something called low doc loans. With this type of loan, lenders will look at different financial measures when assessing your application.

On the other hand, low doc loans are known to become less common, mainly because of responsible lending requirements. These require the lender to be sure that you can handle your loan repayments without any problems.

However, a low doc loan is the perfect choice for fairly new businesses that don’t have two years of financial data to show their lender OR have a complex tax structure and cannot prove their income via tax returns. Low Doc lenders accept the following as income verification:

1. Letter from accountant declaring income

2. Self declaration of income

3. BAS statements

4. Business bank statements

The biggest disadvantage of low doc loans is that they may come with a much higher interest rate. Moreover, they are not offered by all lenders, however we have access to all the lenders who offer low doc loans and will match you with the most suitable bank.

You may also be asked to make a larger deposit than in the case of a traditional home loan as Low Doc Loans typically come with lower Loan to Value Ratio (LVR) requirements.

Fresh Business

Another question that most self-employed people have is related to the time they’ve been on the market, so to speak. If you’ve just started your business, securing a home loan can be a tedious and challenging task.

However, the rules and requirements that come with home loans for the self-employed are in place for a very good reason.

As you may know, small businesses usually don’t make it past the first couple of years – hence the two years of business and personal tax returns that you are required to show your lender.

Even though you may want to move into your own home as soon as possible, it is better if you can endure your current environment a bit and see how you deal with running your own business.

After all, you don’t want to get a home loan that you won’t be able to repay because your business fails in the meantime.

Self-Employed Home Loan Borrowers

As you may have noticed, the self-employed have to go through a bit more when trying to secure a loan for their home. Keep in mind that this doesn’t make it impossible!

Here are some tips that you should pay attention to when you consider getting a home loan:

Financial Information – once again, we stress out the importance of up to date financial information. Financial statements notice of assessments, and income tax returns have to be updated at all times.

Understand Your Assessment – self-employed people are assessed differently by the banks; some may use the average income of your last two years, some the lower of the last two years, while others may use different methods.

Understand Self-Employment – if you are a sub-contractor or contractor, then you may be regarded as an employee by some lenders. Check to make sure that you can really be considered as a self-employed person before applying for home loans designed for the self-employed.

Credit History – small business owners that want to protect their credit rating will always pay attention to their credit history – the solution is the implementation of positive credit reporting.

The Bottom Line

As you can see, self-employed people are able to apply for a loan and actually get it. You may have to consider other things when applying for a home loan, but this is what you have to expect as the owner of your own small business.

If you need any help with your application or understanding how home loans for the self-employed work, feel free to contact our office! Given our staff’s years of experience in terms of finding the best possible loan for our clients, we can help and guide you through the entire process!

The result will leave you with a loan that exceeds your current one and is, overall, better than you may have available now. Contact us today if you have any questions or you simply need more information! Contact us on on 02 9121 6247 or submit your scenario online.

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Whether you’re a first home buyer looking at entering the market or an existing home owner looking at ways to save money on your home loan, we have you covered. We’ve put hundreds of hours of research into these guides to ensure you end up ahead, and it’s completely on the house.

FREE HOME LOAN GUIDES
FREE HOME LOAN GUIDES

So, why use Highline Lending for your home loan?

CHAT WITH AN EXPERT
CHAT WITH AN EXPERT

We meet for a consultation, obtain your supporting documents and proceed to structure and package your application for approval knowing exactly what the banks want to see. We also monitor your home loan post approval ensuring you’re home loan suits you and your financial position

We get paid a commission from our lenders as a result of introducing your business to them. Subsequently, our service is at no cost to you. Our commission does not affect your interest rate whatsoever, if anything, we’re in a position to get you a lower interest rate than the general public due to our relationships with our banks

With our many years experience in the industry, we’ve been exposed to both easy and complex loan scenarios. Each loan we process gets presented to over sixty financial institutions, ensuring we have explored all options possible and are able to provide a solution

CHAT WITH AN EXPERT
CHAT WITH AN EXPERT
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Getting a Home Loan with a Bad Credit Score? Yes It's Possible!

Getting a Home Loan with a Bad Credit Score? Yes It’s Possible!

Can I Still Get A Home Loan If My Credit Rating Is Bad

Getting a home loan is itself a difficult thing to do, depending on certain circumstances. However, getting a home loan with a bad credit rating is probably the most difficult thing you’ll have to get through when trying to settle yourself in a new house.

Still, this is not something impossible to do. There are various ways through which you can get a home loan even if you have a bad credit rating. Before getting into the action, so to speak, we’ll talk a bit about credit and what determines its rating.

Anyone who considers buying a new home via a loan must understand every other thing that comes with doing so. Knowing only the ways through which you can get a home loan with a bad credit rating is not recommended.

What Is a Credit Rating?

When talking to a lender, they will assess your position as a borrower – this is done with the help of your credit rating. Depending on your overall credit rating, the lender will put you in one of the following three categories, thus changing the way they view your application:

Credit Rating of 1 or 2 – you are viewed as a great borrower.

Credit Rating of 3 – you will have your loan assessed normally.

Credit Rating of 4 or 5 – this credit rating makes it very likely for your loan to be declined.

The above is an example based on CBA. Other banks (NAB, BankWest, and ANZ, for example) have a different credit rating into their loan assessment system. This also means that, while certain lenders will decline your loan, others may have no problem with giving you a loan with your credit rating as they look at things from a different angle and different rating approach.

What Is Bad Credit?

If you’ve defaulted on a credit card, bill, or mortgage payment in the past – or the payment of any kind of debt – then this information may be on your credit file. These entrances in your credit file are basically black marks that may make a lender deny your qualification for a home loan.

Bad Credit History – bankruptcy, defaults, court writs, judgements, or one too many credit enquiries can stop you from qualifying for a loan.

Unpaid Bills or Tax – tax bills or council rates are seen as outstanding bills and make for bad credit history.

Over Committed – too many debts for your income or total assets that value lower than total liabilities can have you labeled as beyond help or insolvent.

Lender Credit History – any issues or problems that you might have had with your current lender may influence the way they assess your application.

Mortgage Arrears – in short, missed payments on your home loan. Lenders will usually become more cautious if you’ve had multiple missed payments in the last six months. On the other hand, banks will most likely not refinance your loan if you’ve missed a single payment!

Getting a Home Loan with a Bad Credit Rating – Is it Possible ?

Obviously, it is possible for you to get a home loan with a bad credit score or bad credit rating. Banks and most of the traditional lenders will most likely avoid your application, no matter the reasons you might have for them not to.

On the other hand, by using certain approaches for your application, second tier lenders out there can help you find the best possible lender for you.

What To Do If You Have A Bad Credit Rating & Want A Home Loan

Contact our office and we’ll generate a complimentary credit report and look into the issues of your credit, we’ll see if we can work with it or if we need to work with a credit repair agency to assist.

We’ll first look into prime lenders and see if lenders will consider your credit. These are usually major banks.

If prime isn’t the way to go, we will look into non-traditional lenders, or even specialist lenders, that will consider your home loan application.

Finally, your home loan options will be compared, and you will be presented with several options for your home loan.

We’ll also make sure that you benefit from purchasing or refinancing – we will not present you with a loan offer that you don’t need or can’t afford.

Key Things Lenders Consider When You Apply with a Bad Credit Rating

There are a couple of things that lenders consider when you apply for a home loan with a bad credit rating. These are used to calculate your overall credit rating and see if they are comfortable with giving you a loan.

For example, a loan for buying a home comes with negligible risk, while one used for debt consolidation comes with a rather high risk for the lender. Moreover, if you’ve lived for more than two years in the same address, the risk is very low – on the other hand, 6 months or less of living in the same location come with a high risk for the lender.

The time you’ve been in your current job, the manner of your employment, the number of loans you have applied for, missed payments on current debts, the value of the loan, savings, as well as your net asset position are some of the things that lenders will consider when reviewing your application.

Bad Credit Home Loans Types

There are several types of bad credit home loans. You should investigate all of these before getting a home loan so that you have a clear view of your possibilities.

Paid and Unpaid Default Home Loan

These types of loans are usually offered to borrowers that come with defaults on their credit file. Lenders will look at two types of default lenders, namely, unpaid and paid defaults. These lenders usually have a cap on the size of the default.

Discharged Bankrupt Home Loan

Borrowers that were bankrupt and have now been discharged can qualify for a bad credit home loan. We have lenders that will give you a home loan right after you become discharged bankrupt.

Tax Debt Home Loan

If you have a large debt with the Australian Taxation Office, you can be offered a bad credit home loan. Usually, the Australian Taxation Office debt is added or refinanced  with your mortgage, thus leaving you clear from any debt incurred by it.

Debt Consolidation Home Loan

You can also be eligible for a bad credit home loan if you have several unmanageable small debts. Australians are known to have multiple forms of unsecured debt rolled into their mortgage – the result is a simple monthly payment.

The Bottom Line

Therefore, getting a home loan with a bad credit rating is not something that should be seen as impossible. Nowadays, you have quite a lot of options that you can choose from and apply for a home loan.

Still, it is strongly recommended that you do your best to avoid having a bad credit rating. If you ever have any questions or need information about home loans and your credit rating, don’t hesitate to contact our office for refinancing home loan help.

Our staff, with years of experience, will make sure to help and guide you through the process of finding the appropriate lender for your needs. Just reach out to us – we’re always happy to help you! Contact us on on 02 9121 6247 or submit your scenario online.

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View All Our Articles
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Access our free e-guides

Whether you’re a first home buyer looking at entering the market or an existing home owner looking at ways to save money on your home loan, we have you covered. We’ve put hundreds of hours of research into these guides to ensure you end up ahead, and it’s completely on the house.

FREE HOME LOAN GUIDES
FREE HOME LOAN GUIDES

So, why use Highline Lending for your home loan?

CHAT WITH AN EXPERT
CHAT WITH AN EXPERT

We meet for a consultation, obtain your supporting documents and proceed to structure and package your application for approval knowing exactly what the banks want to see. We also monitor your home loan post approval ensuring you’re home loan suits you and your financial position

We get paid a commission from our lenders as a result of introducing your business to them. Subsequently, our service is at no cost to you. Our commission does not affect your interest rate whatsoever, if anything, we’re in a position to get you a lower interest rate than the general public due to our relationships with our banks

With our many years experience in the industry, we’ve been exposed to both easy and complex loan scenarios. Each loan we process gets presented to over sixty financial institutions, ensuring we have explored all options possible and are able to provide a solution

CHAT WITH AN EXPERT
CHAT WITH AN EXPERT
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Conditional vs. Unconditional Home Loan Approval – The Difference Explained!

Conditional vs. Unconditional Home Loan Approval – The Difference Explained!

What Is The Difference Between Conditional and Unconditional Home Loans

Many home buyers usually assume that they have a formal home loan approval when, in fact, they haven’t been granted any. The risk that presents itself here is that you can make an unconditional offer in order to buy a property and then later discover that you haven’t been approved a home loan.

This is why you should always remember that your loan can’t be formally approved until the lender you worked with formally examines your deposit, Contract of Sale (if applicable) your written evidence of outgoings and income, as well as your personal ID.

You should do your best to know and understand the difference between conditional and unconditional home loan approval to avoid any confusion.

Conditional Home Loan Approval

This type of home loan approval means that, in theory, your loan has been assessed and then approved by your lender. However, the lender will still need more information from you before they can grant you with unconditional – also referred to as ‘formal approval’.

The lender may require information such as a valuation of the property that you are about to buy, more recent payslips, or a dated and fully signed sale contract.

On the other hand, keep in mind that the bank may also come with requirements that you have to meet before they formally approve your home loan.

In short, a conditional home loan approval means that your loan has been approved but there are still some conditions that you have to meet before celebrating.

Unconditional Home Loan Approval

By definition, unconditional approval means that there are no conditions that you have to meet for your loan to be approved. Obviously, unconditional home loan approval is what you should be looking for to make sure that you are very, very close to purchasing and owning a new home.

Your lender will send you a confirmation letter saying that your loan is now formally approved. This means that they have formally assessed your paperwork and have signed your loan application.

In short, they have decided to proceed with your home loan and are happy with their assessment.

Timeframes

You must not forget about timeframes. Conditional and unconditional approvals don’t last forever. They usually come with a timeframe of three up to six months. However, even then, nothing is certain until the settlement itself.

Your lender may still cancel the deal if your financial situation has changed in such a way that you are no longer able to afford a home loan.

The Bottom Line

Now you shouldn’t have any more questions about conditional or unconditional home loan approvals! It’s simple – the first means that you still have some things left to do, while the latter means that you are on the brink of purchasing a new home.

However, if you still have any questions – related to approvals or home loans in general – you can always get in touch with us. We will provide you with the information you need and, if you need any more help, we can also guide you through the process of finding a favourable lender for your needs.

Don’t hesitate – reach out and contact us today! Contact us on on 02 9121 6247 or submit your scenario online.

SHARE THIS WITH YOUR FRIENDS
Share on email
Email
Share on facebook
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Share on whatsapp
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View All Our Articles
view all articles

Access our free e-guides

Whether you’re a first home buyer looking at entering the market or an existing home owner looking at ways to save money on your home loan, we have you covered. We’ve put hundreds of hours of research into these guides to ensure you end up ahead, and it’s completely on the house.

FREE HOME LOAN GUIDES
FREE HOME LOAN GUIDES

So, why use Highline Lending for your home loan?

CHAT WITH AN EXPERT
CHAT WITH AN EXPERT

We meet for a consultation, obtain your supporting documents and proceed to structure and package your application for approval knowing exactly what the banks want to see. We also monitor your home loan post approval ensuring you’re home loan suits you and your financial position

We get paid a commission from our lenders as a result of introducing your business to them. Subsequently, our service is at no cost to you. Our commission does not affect your interest rate whatsoever, if anything, we’re in a position to get you a lower interest rate than the general public due to our relationships with our banks

With our many years experience in the industry, we’ve been exposed to both easy and complex loan scenarios. Each loan we process gets presented to over sixty financial institutions, ensuring we have explored all options possible and are able to provide a solution

CHAT WITH AN EXPERT
CHAT WITH AN EXPERT
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Applying For a Home Loan With a Trust Structure? What You MUST Know!

Applying For a Home Loan With a Trust Structure? What You MUST Know!

Trending Articles

Applying For a Home Loan With a Trust Structure? What You MUST Know!

Australian Property Valuations Explained & How Property Is Valued

Conditional vs. Unconditional Home Loan Approval – The Difference Explained!

Our Fees – How Mortgage and Finance Brokers Get Paid, How Much Do They Make ?

Everything You Need To Know About The National Consumer Credit Protection Act 2009 (NCCP)

How a Mortgage Broker Can Help You Get a Loan, Why Use One

What Is Stamp Duty In Australia? It’s Not Hard To Understand!

SUBMIT YOUR

SCENARIO.

To discuss your scenario, contact us and we’ll be in touch to discuss your next financial move, we’re here to help get your loan approved!

 

Start
view our

CALCULATORS

Browse our suite of property and finance calculators to start preparing your next strategic move

Browse

How To Get A Home Loan With a Trust

As you may know, a trust structure comes with tax advantages and asset protection for investment properties and not only. However, it is known that many lenders don’t actually know how a structure trust loan works – and this may result in you, the borrower, missing out on certain tax advantages and potentially wasting your time with the wrong lender.

This is why, before applying for a home loan with a trust structure, you have to make sure that you fully understand how this process works so that you don’t miss any benefits.

The Lender’s Requirements

As soon as your lender receives your trust loan application, they have to carry out a credit assessment so that they find out if the loan can be approved or not.

For this, they will have certain requirements that have to be fulfilled. Here is what they will be taking into consideration when reviewing your trust loan application:

The Type of Trust

The assessment process is based on the types of trust that exist out there. For example, some financial institutions prefer family trusts while other institutions usually go for discretionary trusts.

In some instances, banks may also go for self-managed superannuation fund trusts or hybrid trusts. How you set up your trust structure is important because it is one of the elements that vary depending on your lender of choice.

You will have to either shop around for lenders or ask your mortgage broker for counsel as to which lender is the perfect fit for you.

The Credit File of the Trust

Banks will also assess the trust credit file. This is an important part of your application, as these firms usually maintain a credit file – as well as some directors or beneficiaries.

The credit file of the trust will be submitted along with the loan application for a better, proper assessment.

Beneficiaries

The institutions that have control over the lender will require you to have adult beneficiaries as guarantor. Moreover, depending on the type of trust structure you have, the number of beneficiaries may vary.

You can expect from two up to four beneficiaries in total. This is another reason why the structure of a trust makes it difficult to use it in order to take out a loan.

The Loan Structure

Most of the times, individuals don’t apply in the name of a trust. Instead, they apply for a loan in the name of a trustee or a director. They do so to access negative gearing benefits – especially when it comes to unit or hybrid trust.

Trust Deed

By using a trust deed, banks will identify the beneficiaries and trustees for those companies. A trust deed gives a lender the opportunity to evaluate and determine whether trustees or beneficiaries are in a position where they can borrow money.

Additional Documents

Naturally, you will also have to provide the bank with additional documents so that they can process a loan for a trust. Make sure to have all of the following before applying for a home loan with a trust structure:

1. Certified copy of the stamped trust deed.

2. If there’s a company trustee, a certified copy of the company constitution.

3. Identification for all beneficiaries of the trust, trustees, and directors of trustees.

4. Notices of assessment and tax returns for the trust. These documents are not always required – for example when it comes to new trusts or low doc trusts.

Can Trusts Get Discounted Loans?

It is possible for trusts to get discounted loans. The secret behind this is to find a lender that knows how to work with your particular type of trust, as well as with your proposed loan amount.

In case you find a lender that doesn’t know how to work with your type of trust, you will most likely not get a discount and you may also miss on some tax advantages.

For example, it is important that your lender processes your loan as a residential one and not as a commercial loan. If they do so, you will end up paying more fees at a higher rate.

On top of that, there are a lot of lenders that can’t approve residential loans when they are associated with trusts at all. This makes most people wonder if they will ever be able to buy an investment property with a trust structure. Rest assured, we know the right lenders who accommodate trust structures for residential and commercial purposes with both individual and company trustee structures.

Types of Trusts that Can Borrow Money

 

1. Self-Managed Superannuation Fund Trusts

2. Property Investment Trusts

3. Hybrid Trusts

4. Unit Trusts

5. Family Trusts

6. Discretionary Trusts

Even though all of the mentioned trusts can apply for home loans, only a few lenders will actually approve them. For example, trust with corporate/company trustees and hybrid trusts are usually more difficult to achieve in terms of financing.

Additional Fees

It is also important to know that every bank may charge an additional fee when lending money to a trust. This is because of the extra work needed to guarantee preparation and indemnity documents.

The Bottom Line

While applying for home loans with a trust structure is possible, there are a lot of other aspects that you have to take into consideration.

The most important one is finding the appropriate lender for you. This implies a lender that can work with your type of trust so that you enjoy all of the benefits that come with it – asset protection and tax advantages.

Even if the lender provides you with a good loan offer, you have to make sure that they can work on your type of trust and, overall, make it favorable for you.

If you have any questions or need more information, keep in mind that you can always contact us! Our staff will always help you find the best loan, according to your needs. With years of experience in the field, we will guide you through this process and help you apply for a home loan in no time!

Get in touch with us because we are always ready to provide you with our assistance! Contact us on on 02 8530 1107 or submit your scenario online.

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