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Finance suggestions

Discussion in 'Property Finance' started by scientist, 25th Jun, 2016.

  1. scientist

    scientist Well-Known Member

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    I just bought a property with cash for $850k but I would like to get a loan for it

    The situation with us is a bit tricky

    The property is owned by a company which is owned by a family discretionary trust

    Wife and I can be guarantors to the loan but the loan must be in the name of the company that owns the property (I assume this is bank's requirement)

    We make 100k pa each but we both work for the same small pty ltd company. Some banks don't like this. We are neither directors nor shareholders of our employer.

    Rental income roughly $128k pa including new property
    Existing loan payments roughly $93k pa excluding new loan being applied for here

    I only have 3 requirements
    1) must be able to borrow at least 600k (I input the above into CBA calculator and it estimates I can borrow 697k which is fine)
    2) lowest overall cost of finance (rate and fees)
    3) offset account

    Any bank or broker suggestions? Feel free to private message me if you prefer
     
  2. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    Is the company that own the property the same company that employs you?

    What's your relationship to this company? Who are the directors?
     
  3. scientist

    scientist Well-Known Member

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    Property owning company is not related to employer at all

    I'm the sole director of the property holding company
     
  4. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    Why has this been an issue previously?
     
  5. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Is the company acting as trustee or are the shares of the company owned by the trustee?
     
  6. scientist

    scientist Well-Known Member

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    Yeah they start to suspect it's a family business or something - once after months and answering all their requests for documents they declined it without a specific reason - when I asked them they said they weren't comfortable on the whole of it. :(

    edit: this was years ago for a different loan and property

    now I wonder - for those of us who don't work for listed companies and household names, how do you secure finance at reasonable market rates?

    The property is owned by company A (director me, shares owned by company B which is the trustee of our discretionary trust - A is owned by B on trust for beneficiaries).
     
  7. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Is company A acting as trustee?
     
  8. scientist

    scientist Well-Known Member

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    No, A owns property for itself
     
  9. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Can't seethe issue unless there is something that's not obvious

    Cash out considerations aside should work ok

    Ta
    Rolf
     
  10. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    On the face of it I can't see why the small company would be an issue - who was the lender involved?
     
  11. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Have you had legal and tax advice on this?

    Not very common to structure like this, but it does have some advantages.
     
  12. scientist

    scientist Well-Known Member

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    Yes I've considered all options for a long time and decided on this for the land tax savings. I'm fine with the downsides (no cgt discount, company tax rate, increased accounting costs etc)

    Now I need a broker or bank suggestion to get a loan - I can get one myself but I think a good broker may know which banks would definitely allow this, saving me potential disappointment
     
  13. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Do you know how franking credits are reduced by depreciation?
     
  14. scientist

    scientist Well-Known Member

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    No... could you explain or point me in the right direction? I assumed they are treated same as any other deduction
     
  15. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    I've written a couple of tax and legal tips on companies owning property - you may want to check them out.
     
  16. scientist

    scientist Well-Known Member

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    Thank you for your wealth of information I'm a big fan, have read through alot of it already. I re-read the company related parts again just now, couldn't find any mention of depreciation

    I understand you charge for your time, I'm happy to investigate this further myself, but would be a great idea for a future article if you were so inclined to write one.
     
  17. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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