Can I buy my first home and place directly into the family trust?

Question from Eduardo updated on 16th October 2006:

I am contemplating investing in property and have no first home yet. Can I buy my first home and place directly into the family trust? I also plan to have a family trust as I have read that through family trust, I can protect my assets and the earlier I have a trust, the better. Will banks and other lending institutions lend to me through a family trust, even on my first home purchase? Thank you.

Our expert responded:

Absolutely you can purchase your first home in a family trust. The Trust could borrow the funds if required also. As in the case of many alternative ownership or borrowing entities you may be required to personally guarantee a loan in the name of the Trust (or if you borrow the funds personally the Trust will need to guarantee your borrowing facilities). Guarantees are usually taken to secure the Bank's lending facilities or to tie in income streams which services any borrowings. Should you be looking to convert this proposed property from an owner-occupied one, ie. your own house to a rental property in the future I would strongly suggest that you seek your accountants and your solicitors advice first as a family trust structure in the future may not be the best ownership or borrowing structure for you for an investment property. If you have any further questions at all, please do not hesitate to contact me directly.

Roger Swift has been in the finance industry for over 20 years both domestically and internationally. Banking experience includes Corporate and Business banking portfolio management, Structured Finance, International Trade Finance, and retail banking (primarily in the home loan market). Personally he has been involved in residential property investment for over 16 years and well versed in asset and tax structuring both from a professional and personal point of view. Call him sometime.


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