Borrowing under company for first time

Discussion in 'Loans & Mortgage Brokers' started by shootingfish, 27th Jan, 2018.

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  1. shootingfish

    shootingfish Well-Known Member

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    I normally work a day job and all my previous loans have been easy PAYG payslips from myself and wife.

    Getting bored of it and now am going to borrow with one of the businesses that i run. Recently changed shareholders to family trust which may bring some issues.

    Have always had loans with CBA, *rolls eyes*, next project will be 3-4 townhouses [I actually prefer commercial borrowing - but pre sales are annoying - I'm aware some banks may treat as resi loan possibly], or my PPOR.

    Net profit is about $250k. Lending capacity?

    Any suggestions as to how I'm going to borrow with the company? Main issues I foresee as the trust being the shareholder now of which I am the director of the company and the director/secretary of the trust (something like that). I determine the beneficiary distribution but the pain in the arse prediction I am having is bank would start to consider as beneficiary distributions won't count towards the serviceability.
     
    shootingfish, 27th Jan, 2018
    #1
  2. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    The lenders will look at the net income under your direct control. So if you distrib the 250 to you or spouse then that is ok to use subject to normal timing criteria etc like 2 years service etc.

    They may also allow your payg income if it's ongoing and perhaps the new rent from the new props.

    Not many lender will do 3 or 4 oot. On resi terms

    Ta

    Rol
     
    Rolf Latham, 27th Jan, 2018
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  3. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Is the company trading?
     
    Terry_w, 27th Jan, 2018
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  4. shootingfish

    shootingfish Well-Known Member

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    Company is trading and running. I also used to work a day job of which I only work part time now as I am old now Andrew don’t have the energy to do everything haha.
     
    shootingfish, 28th Jan, 2018
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  5. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Not many lenders will lend to a trading company. CBa won't.
     
    Terry_w, 28th Jan, 2018
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  6. shootingfish

    shootingfish Well-Known Member

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    Lend to myself with me as director of trading company that will be guarantor. OR, simply using income from trading company as serviceability?
     
    shootingfish, 29th Jan, 2018
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  7. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    confusion here I think on the INCOME entity vs Holding entity

    who will own the prop ?

    ta

    rolf
     
    Rolf Latham, 29th Jan, 2018
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  8. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    You mean borrowing yourself with company guaranteeing? Why the added risk?

    Your income from a trading comapny could be taken into account whether buying in your own name of a non-trading company is borrowing with you are guarantor.

    As Rolf says you are conflating 2 separate issues.
     
    Terry_w, 29th Jan, 2018
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  9. shootingfish

    shootingfish Well-Known Member

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    Sorry gentlemen. Let's restart fresh.

    I want to buy a house to live in. I am a director of a company making net 250k p/a. Last year however we change the sole shareholder, myself, to the family trust 100%.

    How would this affect my borrowing? I assume that I can just say I am going to pay myself the director the entire $250k as director wages and give nothing to the trust/shareholders of the company.
     
    shootingfish, 29th Jan, 2018
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  10. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    It probably wouldn't change - assuming you are the trustee.
    You can't just pay yourself a wage for serviceability purposes if you are the owner of the company or an associate such as trustee.

    You will be traded as self employed. Last 2 year's income will be averaged probably.
     
    Terry_w, 29th Jan, 2018
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  11. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    too many variables still

    best to get specific advice from your banker/ broker

    As a generality, its better to have that chat before making decisions on who gets paid what and WHY !

    ta

    rolf
     
    Rolf Latham, 29th Jan, 2018
    #11