There has been a lot of discussion lately around changes to trust and company lending, with a few major lenders tightening their policies. These structures are common for investors, so when lenders shift their approach, it is something worth paying attention to.
Recently CBA introduced a new rule that affects anyone wanting to borrow through a company or trust. If the structure does not already have a lending history with CBA, the bank may not accept a new application. In most cases the company or trust would need to have held a lending facility with the bank for at least six months before they will look at taking it on. This change came in towards the end of November and it has already shaped the way some investors approach their next steps.
This move followed Macquarie’s decision to pause new lending to trusts and companies altogether. Westpac has also made changes and has stopped offering these loans through the residential channel, which means they are now only available through their business banking channels. A key driver behind these changes has been the growing concern around how some of these structures are used and promoted, especially online. While trusts and companies can be incredibly useful when set up properly, they also come with more complexity and lenders want to make sure they are fully across the risk.
So, what does this mean for borrowers?
If you were planning to buy through a trust or company in the near future, it may not be as easily accessible or as straightforward as before. It might mean building a relationship with a lender earlier, reviewing which structure is right for you or adjusting your timeline. For some people borrowing in their personal name may be the simpler pathway depending on the strategy.
The good news is that there are still options. It just comes back to having the right plan and understanding what each lender is looking for. Every situation is different and the best way forward depends on your long-term goals and how you want to structure your finances.
If you are unsure how these changes affect you or you want to understand the best way forward, our team is here to help. We can walk you through the updates and make sure your strategy still works for where you want to go. Banks are always adjusting their policies and their risk appetite, so it is important to stay informed. Keeping in touch with your broker will help you stay ahead of any future changes.
