Yes, a family trust can obtain a mortgage in Australia — but the process is more complex than for an individual borrower. Legally, the trustee (not the trust itself) is the party that enters into the mortgage contract, provided the trust deed grants authority to borrow and mortgage property. Most lenders will assess the financial standing of the trust, require personal guarantees from trustees or directors, and review the trust deed in detail.
While borrowing through a family trust can offer tax and asset protection benefits, it also carries legal risks and stricter compliance requirements. This article explains the legal framework, lending criteria, and structuring strategies involved, since mortgages are often required to finance a purchase of residential or investment property.
To legally obtain a mortgage under a family trust structure, several conditions must be satisfied:
Lenders also assess the financial position of the trust — including income distributions, assets held, liabilities, and tax filings — much like they would with a business entity.
In a mortgage involving a family trust:
This distinction is critical. Courts have consistently ruled that a beneficiary’s rights are limited to enforcement of trust obligations — not control of trust decisions like entering into debt.
Each bank or lender sets its own credit policies regarding family trusts. Some may be unwilling to lend to trusts, while others — particularly specialist or non-bank lenders — offer structured products specifically for trust entities.
Most Australian lenders require:
For corporate trustees, lenders often assess the directors’ creditworthiness more heavily than the trust’s financials.
To improve your trust’s mortgage approval chances:
Well-advised structuring can prevent costly issues — such as rejection of the application, or unenforceable mortgage clauses due to deed inconsistencies.
While trusts can borrow, they carry specific legal risks:
Seek legal review of all documentation — including loan contracts, guarantees, and trust deed clauses — before signing.
Short transition: Many Australians exploring trust-based property investment have similar questions. These FAQs address the most common legal and procedural issues.
Yes. Legally, the trustee is the borrower, not the trust itself. Provided the deed permits borrowing, a home loan is possible.
Typically, lenders require the trust deed, identification of trustees, tax returns (if applicable), and financial statements. Additional documents may be required based on lender policy.
This refers to a certified copy of the trust deed and sometimes a statutory declaration confirming the trust’s existence and borrowing powers.
Income from the property must be reported by the trustee and may be distributed to beneficiaries. Negative gearing, CGT, and state taxes apply.
While not commonly used in Australia, a land trust (if structured similarly to a discretionary family trust) can apply — but lender acceptance varies.
Yes. However, the trustee must act within their legal powers and may need to provide personal guarantees if using a corporate structure.
While securing a mortgage through a family trust is legally possible in Australia, it demands thorough planning, trust deed alignment, and legal clarity at every step. Trustees must ensure they are acting within their powers, and lenders must be satisfied that the trust structure presents manageable risk.
Legal and financial advice from professionals experienced in trust lending is strongly recommended. At LegalFinda, we connect individuals and businesses with legal specialists who can guide your trust through the mortgage process — from structuring to settlement. For families seeking personal guidance, it can be valuable to understand how to find a good family law lawyer who can provide tailored legal advice on both trust structuring and mortgage compliance.