How long does it take to get a loan approval for smsf loans?
This is an important question, as when you are dealing with the vendors real estate agent, realistic expectations need to be established.
They are not like home loans!!!
When purchasing a property using a smsf loan it is common for a full approval to take over a month.
Why does it take so long? The answer is there is much more compliance required.
The below is not meant to scare you. On the contrary, it is to prepare you for what may be coming.
As an example, here is a list of conditions that may accompany a conditional approval:-
- Satisfactory Valuation
- Valuers confirmation of proposed rent
- Copy of Contract of Sale with the Custodian Company clearly noted as the Purchaser who is also the security
provider under a non-recourse arrangement
- ACN number and Registration Date of the Custodian
- ABN number of Superannuation Fund
- ACN number and Registration Date of Company Trustee if applicable.
- A Letter from Super Fund Accountant confirming that the Super Fund Company Trustee does not trade in its own right and its sole purpose is to be the Trustee of the Fund
- Fully executed and dated SUPER FUND TRUST DEED (incl. any Amendment Deed if applicable)
- Fully executed and dated SECURITY CUSTODIAN TRUST DEED
- Clear copied of 100 point ID for all members / directors
- Personal Guarantee from Members – (NB: Non-Recourse to SMSF Assets but recourse to members Personal Assets) – Documents to be sent with Loan Offer Documents.
- Our verification of the details you have provided.
- Satisfactory results from our enquiries, including a credit reference check on each applicant.
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POST-FORMAL APPROVAL REQUIREMENTS
Both the Super Fund (with any amendment deeds) and Custodian Deed are to be vetted and accepted by the banks solicitors with any issues raised mitigated prior to the Bank requesting preparation of loan / mortgage documents.
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NOTE: The bank expects that the Trustees have sought appropriate financial advice prior to entering this transaction.
The borrower (SMSF Trustee) must provide the Bank with proof that they have received independent financial advice in
relation to:
(i) The economic benefits of the transaction to them,
(ii) The financial risks associated with borrowing by a SMSF.
A suitable document will be sent with Loan Documents for a Qualified Financial Adviser to sign accordingly.
There may be a cost involved with this exercise please refer to the clients Adviser.
This document must be signed and provided for the bank to proceed to settlement.
So as can be seen from above, even though you receive a conditional approval, it can still be quite daunting!!!
This is why when dealing with a real estate agent time expectations need to be managed.
So what is our role?
Our role is to help you through this maze.
As always, if you need help please call us.
