Quick answer
Property owned by a family trust or a company can usually secure a second mortgage for business purposes, provided the trustee or company has power to borrow and give security. The lender checks the trust deed or company details, the trustee or directors sign, and individuals usually give guarantees. The extra step is paperwork, not appetite: with the deed and extracts ready, these files move almost as quickly as personally owned property.
Key points
- The trustee or company is the mortgagor; it must have power to give security.
- Lenders read the trust deed, including all variations, for borrowing and security powers.
- Directors and key individuals usually give personal guarantees.
- Property in a self-managed super fund generally can't secure a business loan.
- Trust needs
- Full deed and variations
- Company needs
- ASIC extract, director signatures
- Guarantees
- Usually from directors
- SMSF property
- Generally not usable
Why do trusts and companies need extra steps?
When a person owns property, they sign the mortgage and that’s that. When a trust or company owns it, the lender must confirm two things first: that the entity exists and is controlled by the people signing, and that it has the legal power to borrow and give the property as security. For a trust, that power comes from the trust deed. The ATO describes the trustee’s role simply: the trustee holds the trust property for the benefit of the beneficiaries. A lender reads the deed to make sure a mortgage is within what the trustee is allowed to do.
None of this reduces lender appetite. It’s documentation, and specialists handle it routinely.
What does the lender check for a trust?
| Item | Why |
|---|---|
| Full trust deed with every variation | Confirms the trustee’s powers to borrow, mortgage and guarantee |
| Current trustee (individual or company) | The trustee signs the mortgage |
| Appointor or principal details | Shows who controls the trust |
| Trustee company’s ASIC extract | Confirms directors if a corporate trustee is used |
| Beneficiary relationships | Helps confirm the borrowing benefits the trust’s purposes |
A common snag: the deed allows borrowing for the trust’s own purposes but is unclear about securing another entity’s debt, such as the operating company’s loan. The lender’s lawyers will say whether that’s a problem and, if so, whether a variation or a different structure fixes it.
What does the lender check for a company?
- ASIC company extract (directors, secretary, shareholders); lenders generally search ASIC registers themselves.
- ACN and the company’s registered name exactly as on title.
- Director signatures on the mortgage, plus personal guarantees from directors.
- For a company that isn’t the borrower (for example, a property company securing the trading company’s loan), confirmation that giving the security benefits the company.
Who gives guarantees, and why?
With entity-owned property, a lender usually wants a person behind the loan too. Directors of the borrowing company and, often, the individuals who control the trust will be asked for personal guarantees. That means that if the entity can’t repay, the guarantors can be pursued personally. Guarantors should understand exactly what they’re signing, and many lenders ask them to get independent legal advice.
Have a trust or company structure? Tell us who owns what and we’ll map the signing and paperwork before anything’s lodged.
What about property in a self-managed super fund?
That’s a different category. Superannuation rules generally prevent a fund’s assets being used as security for a member’s personal or business borrowing. If your business premises are held in your SMSF, speak to your SMSF adviser before assuming they’re available; a different property is usually the answer.
How do you keep an entity file fast?
- Locate the complete trust deed now, including every variation and trustee change. This is the number one delay.
- Check names match exactly across title, ASIC records and the deed.
- Line up every director and guarantor for signing and ID.
- Get the first mortgage statement in the entity’s name.
- Explain the structure in one sentence on the enquiry: “Property owned by the Smith Family Trust (corporate trustee Smith Holdings Pty Ltd), loan to Smith Plumbing Pty Ltd.”
Our documents checklist lists the core items every file needs on top of these.
Illustrative example: trust property, company borrower
A family trust owns the industrial unit its related company trades from. The unit is worth about $1,500,000 with $600,000 owing. The company needs $300,000 to clear ATO debt and buy stock. The trust’s corporate trustee gives a second mortgage over the unit; the company is the borrower; both directors guarantee. The deed permits the trustee to secure a related entity’s obligations. Combined LVR is 60%, within the workable band for commercial property. The figures are illustrative.
What if the trust deed is old or missing pages?
Older family trust deeds were often written before anyone imagined the trust securing a related company’s borrowing, and many have been varied several times since. If yours is decades old, ask your accountant or the lawyer who set it up for a complete, current copy with every variation and trustee change, in order. If pages are missing, a replacement copy can sometimes be sourced from the original solicitor or the accountant’s records.
Where the deed genuinely doesn’t give the power needed, a variation may be possible, depending on what the deed allows and who has power to vary it. That’s legal work with its own timeline, so it’s better discovered on day one than on the eve of settlement. Sending the deed with the enquiry, or immediately after the first call, is the simplest way to find out.
Does the first lender’s consent work differently for entities?
The principle is the same: if the first loan terms restrict further mortgages, consent is needed. The first lender will expect the request from the entity that holds the loan. See first mortgagee consent.
What if the property is held by several entities or people?
Mixed ownership is common: a husband and wife as individuals, or a trust and an individual as tenants in common. Every registered owner still signs, each in their correct capacity. Our guide on co-owned property as security explains how each ownership type affects who must sign and what they’re agreeing to.
Structure complicated? That’s our normal
Trusts, companies and guarantees add paperwork, not doubt. The enquiry takes about a minute and involves no credit check when you first enquire.
We don’t send your enquiry out to multiple lenders. One specialist reads the structure, tells you which documents unlock it and calls you back. Please describe who owns the property and who’s borrowing as precisely as you can; getting the entity names right at the start saves days at the end.
Frequently asked questions
Can my family trust mortgage its property for my company's loan?
Usually, if the deed allows the trustee to borrow, give security and guarantee the obligations of others. The lender's lawyers review the deed to confirm this. If it's silent or restrictive, a deed variation may be possible.
Do I need the original trust deed?
A complete copy is usually enough, including every variation and any change of trustee. Missing pages or variations are the most common delay.
Do directors have to sign personally?
Directors sign for the company as mortgagor or borrower and are usually asked to give personal guarantees as well.
What about property in a self-managed super fund?
Super rules generally stop fund assets being used as security for a member's business borrowing. Talk to your SMSF adviser.
Does a corporate trustee complicate things?
Slightly. The lender needs the trust deed plus the trustee company's ASIC details, and signatures from its directors. It's routine for specialist lenders.