Quick answer
Trust borrowing is when a loan is taken out by the trustee of a trust, such as a family or unit trust, rather than by an individual. Lenders look at the trust deed, the trustee, the beneficiaries and often personal guarantees. Ownright Custom Finance arranges trust loans Australia-wide, including for structures that mainstream lenders find tricky.
Key points
- The trustee, not the trust, signs the loan
- Lenders read the trust deed to check borrowing powers
- Personal guarantees from trustees or beneficiaries are common
- Structure and paperwork decide which lenders can say yes
- Suits
- Family trust, unit trust and discretionary trust borrowers
- Security
- Property or assets owned by the trust, sometimes extra security
- Typical extras
- Trust deed, trustee details, guarantees
- Australia-wide
- Yes
What does it mean to borrow through a trust?
A trust is not a person, so it cannot sign a loan itself. The trustee does that on the trust’s behalf. The trustee may be an individual or a company, and the lender’s security usually sits over assets the trust owns, most commonly property. Borrowing through a trust is common for family businesses, investment property portfolios and families that want assets held separately from personal names.
The structure brings benefits that an accountant or solicitor can explain. For a lender it brings extra reading. They need to know who controls the trust, what the deed allows and where the repayments will come from.
Which types of trust do lenders see?
| Trust type | Basic idea | What lenders focus on |
|---|---|---|
| Discretionary (family) trust | Trustee decides how income is shared among beneficiaries | Deed powers, history of distributions, guarantor strength |
| Unit trust | Ownership split into units held by unit holders | Who holds the units, whether holders will guarantee |
| Hybrid trust | Mix of fixed and discretionary features | Whether the deed is clear and the structure is documented |
| Testamentary trust | Created through a will | Terms of the will and the trustee’s powers |
| Bare trust | Holds an asset for one person | Often a technical structure used for specific purposes |
Super fund borrowing has its own rules, covered separately on our SMSF borrowing page.
What do lenders look at on a trust loan?
The trust deed. Lenders confirm that the trustee has power to borrow, to grant security and, if relevant, to buy the type of asset involved. Old deeds sometimes need updating before a lender will proceed.
The trustee. An individual trustee is assessed on credit history and capacity. A company trustee adds company searches and director details.
The income. Trusts do not pay a salary. Lenders look at rental income, business profits or distributions, and often the personal incomes of those who will guarantee.
The guarantors. A lender may want guarantees from directors, trustees or beneficiaries. The MoneySmart page on going guarantor is a good plain-English read for anyone asked to give one, and our guide to guarantors covers the basics.
The security. Property location, type and valuation, or the business assets in a business trust.
Who does trust borrowing suit?
- Families holding investment property in a discretionary trust
- Business owners whose operating business is run through a trust
- Investors in a unit trust buying a commercial asset together
- Beneficiaries of a testamentary trust releasing money for a property
- Trusts that need to refinance because the current lender changed its approach
Why can trust loans be tricky?
Trust loans can slow down because there are more moving parts. A deed written decades ago may not mention modern lending. A trustee company may have changed directors. Distributions may have been uneven, making income look lumpy. Some lenders also treat trusts conservatively on income, particularly when there is little trading history.
Clear financials, a tidy deed and an accountant’s summary make a real difference. Our loan readiness guide walks through the preparation.
How does Ownright approach trust borrowing?
Ownright Custom Finance specialises in finding solutions when a structure does not fit the mainstream box. Trevor Scott has been in finance for more than forty years, and the team works with trustees in every state and territory.
We start by understanding the structure in plain English: who is the trustee, who benefits, how money flows. We then match the trust to lenders that actually read trust files, rather than sending it to the first lender on the list. For deals that are time-sensitive or involve a tax debt, we can consider private options and explain the trade-offs. Our company and trust borrowing page covers the business side of the same topic.
Illustrative example
An illustrative family trust owns two rental properties and wants to buy a third. The trustee is a company with two directors. A bank asks for more guarantors than the family is comfortable with. By reviewing the deed, the rental history and the directors’ positions, a broker can approach lenders that accept the trust’s income and request fewer guarantees, or explain which guarantee is limited and why.
Mistakes to avoid
- Assuming the deed is current without checking it
- Signing a contract before checking the lender can lend to the structure
- Giving guarantees without independent legal advice
- Letting records of distributions fall behind
- Mixing personal and trust spending, which muddies the financials
Documents to have ready
- The trust deed and amendments
- Trustee company extract, if applicable
- Trust financial statements and tax returns
- Personal ID and income documents for trustees and guarantors
- Details of the property or asset and the purchase or refinance contract
The documents guide lists the common extras, and if the trust is refinancing see how a private refinance might work when banks decline.
What if the trust has a tax debt or a patchy history?
Trusts that have fallen behind with the ATO, or that have had a rough year, are not automatically out of the running. The lender wants to see that the debt is understood, that lodgments are current and that there is a plan. For some borrowers a short-term private loan, sometimes secured by a second mortgage, can clear the debt and buy time to restore the numbers. Our guide on ATO debt and your property explains the options in plain English.
If the issue is credit rather than tax, the trustee’s own file matters, since many lenders look through the trust to the people behind it. Honest disclosure at the start saves a failed application later.
How long does a trust loan take?
There is no single answer. Lenders with experience in trust files can move steadily, while others need extra rounds of questions about the deed or the guarantors. Speed depends on the lender, the security and how quickly documents arrive. Having the deed, financials and ID in one folder before applying is the single best way to shorten the path. A solicitor or accountant who can confirm trustee powers quickly helps too.
Can a trust borrow for something other than property?
Yes. A trust that runs a business may borrow for equipment, working capital or a business purchase, and the same deed checks apply. Equipment loans may rely more on the asset, while working capital depends more on trading history. Tell us what the trust does and what you need the money for, and we will point you toward the right type of lender.
Looking for trust finance that fits?
Sounds like you need a lender who understands trust structures. We’re the lending experts in trust and family-structure borrowing, so tap the button below and see if you qualify. You can also call 03 7043 7233 to talk it through first.
How it works, step by step
- 1
Step 1
Send us the trust type, who the trustee is and what you want to borrow for.
- 2
Step 2
We review the deed and the income picture to see which lenders suit.
- 3
Step 3
We present the trust clearly, with a plain-English summary of how it earns and distributes.
- 4
Step 4
We coordinate signing with your solicitor and accountant, then settlement.
Frequently asked questions
Can a trust borrow money for property?
Yes, in most cases, provided the trust deed gives the trustee the power to borrow and to give security. Lenders read the deed to confirm this. Many also ask for personal guarantees from the trustees or key beneficiaries because the trust itself usually has limited assets beyond the property.
Do lenders always ask for personal guarantees on trust loans?
Often, though not always. A guarantee gives the lender a claim against individuals as well as the trust assets. Whether it is required depends on the lender, the loan and the trust's strength. We explain the requirement upfront so no one is surprised when documents arrive.
Is it harder to borrow through a discretionary trust?
It can be, because income is not fixed and lenders must work out how repayments are supported. Clear financials, a track record of distributions and an accountant's letter can help. Some lenders have more experience with trusts than others, which is where a broker's lender knowledge matters.
What documents are needed for a trust loan?
Typically the trust deed with all amendments, the trustee's details, the trust's recent financials and tax returns, personal documents for the trustees and guarantors, and details of the security. If the trustee is a company, company documents are added. We give you a tailored checklist.
Can a trust with a tax debt still borrow?
Sometimes. Lenders look at whether the debt is on a payment arrangement and how it affects cash flow. A private option may be possible when the ATO is involved. We ask about the debt openly and match it to lenders with an appetite for that situation.
Can I move a property into a trust using a loan?
It is possible to refinance a property into a trust structure, but the transfer can trigger duty and tax questions. Those are for your accountant and solicitor. Once the plan is settled we can look at lenders who are comfortable with the new structure.