Will you lend to me if the property is owned by a family trust?

Why does a trust make things a little different?

Because a trust isn’t a legal person in the way a company or an individual is. It’s a relationship: a trustee holds property on behalf of beneficiaries, under the rules set out in the trust deed.

So when a family trust “owns” a property, legally the trustee owns it — as trustee. That trustee might be you personally, or more often a company set up for the purpose. When the property is offered as security for a business loan, the lender deals with the trustee, and needs to be sure the trustee is allowed to do what’s being asked.

What does the lender check in the deed?

What they look for	Why
Power to borrow	The trustee must be allowed to take on debt
Power to mortgage trust property	So the security is valid
Power to give guarantees	Especially if the loan is to a different entity
Who the trustee is right now	Changes of trustee need proper documentation
Variations to the deed	Amendments can change powers
Vesting date	Whether the trust is close to ending
Beneficiaries	Sometimes relevant to related-party security

A good deed makes this quick. An old, incomplete or lost deed is the most common cause of delays with trust security.

Which loans can use trust property?

Property-secured business loans — $20,000 to $5,000,000 through first mortgages, second mortgages or caveat loans over residential or commercial property — can be secured by property held in a trust, with the trustee signing. The assessment is the same as usual: equity, purpose and a clear repayment plan.

The borrower might be:

• the trust itself (through its trustee), if the trust runs the business;
• a related company, with the trust giving security and a guarantee;
• an individual who is a beneficiary or runs the business.

Property in a trust and a business need? Tell us how it’s set up — no credit check to enquire.

Who ends up guaranteeing?

Commonly, directors of a corporate trustee are asked to give personal guarantees. If an individual is the trustee, they may sign both in their capacity as trustee and personally. Expect to talk about this upfront — it’s standard, not a sign of distrust.

What should I get ready?

1. The trust deed and every deed of variation.
2. Details of the current trustee (and ASIC details if it’s a company).
3. Any change of trustee documents.
4. The property title details and what’s owed on it.
5. A short note from your accountant on how the trust fits with the business, if the structure is complex.

The ATO has a helpful overview of how trusts, trustees and beneficiaries relate to each other if you need a refresher.

An illustrative example

Invented example, for illustration only.

A family trust, with a company as trustee, owns a warehouse leased to the family’s transport company. The transport company needs $400,000 for two prime movers and trailers.

• The lender reviews the trust deed and two variations, confirming the trustee can mortgage trust property and guarantee a related company’s debt.
• The trustee company gives a first mortgage over the warehouse. Its two directors give personal guarantees.
• The loan is assessed on the warehouse’s equity and the transport company’s trading.

For more on using premises as security, see commercial property. If the business itself recently moved into a trust or company structure, read our page on changing structure.

What are the most common trust snags?

Most trust-secured loans go smoothly. When they don’t, it’s almost always one of these:

• The deed can’t be found. Ask your accountant and the lawyer who set up the trust. Sort this before you apply.
• Variations are missing. The lender needs the full history, not just the original deed.
• The trustee changed and wasn’t documented. A new trustee company or individual needs the right paperwork, and title records may need updating.
• The deed doesn’t allow guarantees for related parties. If the trust is securing a loan to a family company, the deed must permit it. A lawyer may be able to vary the deed.
• The vesting date is close. If the trust is nearly due to end, a lender will want to understand what happens next.
• The property is in a different name from the trustee. Title and trust records should line up.

Getting your accountant to confirm the structure in a short note can save days. Our page on changing structure covers how businesses move into trusts and companies, and commercial property explains how premises owned by a related entity are assessed. If you’d like a quick sense of your options first, try the situation search.

If your trust’s paperwork does need fixing, don’t let it stop the conversation. You can still enquire, find out what’s possible and get a clear list of what the lender will need, while your accountant or lawyer tidies up the deed. Knowing exactly what’s required saves a lot of back-and-forth later and gives you a realistic idea of timing.

Let’s check your structure together

Trusts are everywhere in Australian family businesses, and they don’t have to slow a loan down. Getting the paperwork together early makes all the difference.

We don’t do a credit check when you first enquire, and your details won’t be handed around to multiple lenders. A real person looks at your structure and calls you. Please describe accurately on the form who owns the property and how the trust is set up, so we can point you to the right option first time. See what’s possible.