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As mainstream banks pull back on lending to trust and company borrowers, non-bank lender Wave Money has reaffirmed its commitment to supporting brokers and their professional investor clients.
At the end of October, brokers were shocked when Macquarie Bank announced it would not accept new home loan applications where the borrower is a trust or company. While the lender is still accepting income from trusts and companies for individual borrowers, it is no longer writing new home loans where the borrower is a trust or company.
The decision was driven by a range of factors, Macquarie said, including the “emergence of strategies on social media aimed at maximising lending through trusts and companies” and new regulations that would require additional verification steps and slow down turnaround times.
Speaking to Broker Daily following the move, several brokers flagged that Macquarie joined a growing number of banks that had moved away from lending in this area, including Westpac and St.George. However, they outlined that they expected more lenders to pick up this business from Macquarie.
Indeed, non-bank lenders, such as Wave Money, have already started flagging that they are actively lending to non-trading trust entities, including family, discretionary, and unit trusts, as well as company borrowers.
The non-bank lender said it works closely with its broker partners to ensure its credit approach and flexible policy settings help deliver outcomes for professional investors, business owners, and self-employed clients using complex ownership structures.
For example, Wave Money’s policy for borrowing in a trust recognises negative gearing, so losses from the trust against personal taxable income exclude debt in other trusts where the entity is non-trading, profitable, and self-sustaining and can accept accountant’s letters to verify structure and independence across multiple trusts or companies.
Wave Money said that it works to ensure servicing reflects the real picture, without duplicating obligations or missing offsets, as some brokers have experienced at other lenders.
“Understanding complexity and risk is what we do best,” said John Flavell, managing director and founder of Wave Money.
“We collaborate with brokers to understand each deal in context and make decisions based on real circumstances, not rigid parameters.”
Tyler Peters, the head of lending at Wave Money, added: “We’ll always take the time to understand the structure behind the deal.
“Our brokers know they can pick up the phone, talk to credit and get a fair, commonsense assessment – that’s the power of relationship-driven lending.”
You can find out more about the changing bank appetite for trust and company loans in the Broker Daily Uncut podcast.
Tune in to the episode, ‘Trust lending shake-up: How Macquarie’s move affects the market’, here:
[Related: Macquarie’s halt on trust and company loans will ‘reshape’ broker strategies]