Company, Trust & SMSF Lending
Lending to a fund, trust or company is a different process from lending to a person. Fewer lenders participate, the documentation is heavier, and the structure has to be right before an application is lodged.
A Narrower Field, and Less Room for Error
Borrowing through a structure is entirely ordinary — but it is not the same application as a personal home loan. The lender is assessing an entity as well as the people behind it, and the paperwork that establishes that entity has to hold up to scrutiny.
The practical consequence is that fewer lenders will consider it, and the ones that do have specific requirements about how the structure is set up. Getting that sequence right is most of the work.
- Which structure you are borrowing through, and whether it is properly established
- Whether the trust deed or fund documentation permits the borrowing
- Who the trustee is, and whether a corporate trustee is required
- How income flowing through the structure is assessed
- Which lenders will consider this structure at all
- What guarantees the directors or members will be asked to give
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Limited Recourse Borrowing
A self-managed super fund that borrows to buy property generally does so under a limited recourse borrowing arrangement. The property is held in a separate holding trust, and the lender's recourse is limited to that asset rather than the fund's other holdings.
It is a well-established structure with strict rules. Compliance is your accountant's and adviser's territory — we handle the lending, and we will not proceed where the structure has not been properly established by the right professionals.
- The fund's deed and investment strategy must permit the borrowing
- A separate holding trust and, generally, a corporate trustee
- Deposit and ongoing costs funded from within the fund
- Lenders typically require a larger deposit than for personal lending
- Members are commonly asked to provide personal guarantees
We work alongside your accountant and financial adviser rather than in place of them. Whether an SMSF purchase suits your circumstances is their advice to give; whether it can be financed, and how, is ours.
Assessed as an Entity and as People
Borrowing through a family trust, unit trust or company is common for asset protection and tax planning. Lenders will look at the entity's position and at the individuals standing behind it.
The deed matters more than people expect. Lenders read it, and a deed that does not clearly permit borrowing, or a trustee arrangement that does not suit, will stop an application regardless of how strong the numbers are.
- The trust deed or company constitution reviewed for borrowing powers
- Directors and trustees generally providing personal guarantees
- Income assessed through the structure, which needs clean financials
- Distributions and their consistency examined across recent years
- Corporate trustee requirements varying between lenders
Where a structure needs amending, that is work for your accountant or solicitor, and it needs doing before an application rather than during one.
Why These Applications Fail
Structured lending applications rarely fail on the numbers. They fail on documentation and sequence.
- The structure was set up after the property was found, not before
- The deed does not permit the borrowing, and nobody read it until assessment
- Financials are unavailable, out of date or inconsistent between entities
- The chosen lender does not lend to this structure at all
- Guarantee requirements were not discussed with the people being asked
Each of these is avoidable with preparation. It is the main reason we ask for the documentation early rather than at the point of application.
The Process, Step by Step
- Structure reviewWhat entity you are borrowing through, and whether its documentation supports the borrowing.
- Lender identificationNarrowing to the lenders that will consider this structure and this asset.
- Document preparationDeeds, financials, tax returns and guarantees assembled before anything is lodged.
- ApplicationOne prepared submission, with the structure already verified rather than tested at assessment.
- SettlementCoordinated with your accountant, solicitor and, for an SMSF, the holding trust arrangements.
What to have ready
- The trust deed, fund deed or company constitution
- Two years of financial statements and tax returns for the entity
- Personal tax returns and identification for directors, trustees or members
- For an SMSF: the investment strategy and recent fund statements
- Details of the property being purchased
- Existing loan statements for the entity and its principals
Not all of it is needed on day one. We will tell you what matters first so you are not gathering paperwork you do not need yet.
Common Questions
Can my SMSF borrow to buy a property?
A self-managed super fund can generally borrow to acquire property under a limited recourse borrowing arrangement, subject to the fund's deed, its investment strategy and the applicable rules. Whether it suits your circumstances is a question for your accountant and financial adviser. Whether and how it can be financed is where we come in.
Which lenders will lend to an SMSF or trust?
Fewer than for personal lending, and their requirements differ meaningfully — on deposit, on trustee structure and on the type of property. Identifying the realistic field before applying matters more here than on a standard home loan.
Do I need a corporate trustee?
Many lenders require one for SMSF borrowing and prefer one for trust lending. Whether it is required in your case depends on the lender and the structure. It is one of the first things worth establishing, because retrofitting it delays an application considerably.
How much deposit does an SMSF need?
Generally more than for personal lending, and it varies by lender and property type. The fund also needs to cover costs and retain enough liquidity to meet its obligations, which is a separate consideration from the deposit itself and one your adviser should be across.
Will I have to give a personal guarantee?
Commonly, yes — directors, trustees or members are frequently asked to guarantee borrowing by an entity. It is a genuine personal obligation and worth understanding properly, with your own advice, before signing.
Can I use a trust to buy an investment property?
Trusts are widely used for investment property, typically for asset protection or tax planning reasons. Whether it is right for you is advice from your accountant. From a lending perspective, the deed needs to permit the borrowing and the financials need to be clean and current.
Guides on This Topic
These go deeper than a service page reasonably can. All general information only — and none of it takes your particular circumstances into account.
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Learn more →Company, Trust & SMSF Lending Across the North Shore & Northern Beaches
We work with clients across Mosman, Manly, Chatswood, Lane Cove, Willoughby, Neutral Bay, Cremorne, Northbridge, Castle Cove, Lindfield, Killara, Gordon, Pymble, St Ives, Frenchs Forest, Forestville, Seaforth, Balgowlah, Freshwater, Dee Why, Narrabeen and the surrounding suburbs. See all locations →
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General information only. It does not take your objectives, financial situation or needs into account, and it is not credit or financial advice. Lender policy and eligibility change regularly and vary between lenders — talk to us about your own circumstances before acting on anything here. Sabea Financial, Credit Representative 539 662, ABN 86 653 823 253, is authorised under Australian Credit Licence 391237.