A Super Fund Home Loan (SFHL) is available to an authorised Australian Self-Managed Super Fund (SMSF) for the purpose of purchasing residential investment property.
One borrowing structure involves a loan to a SMSF Trustee with a Security Custodian purchasing the residential investment property on behalf of the Super Fund. This Security Custodian, which must be a limited liability company, then holds the property as an asset in trust for the Super Fund. It has the beneficial right (but not the obligation) to acquire the underlying asset at a future date.
The loan is secured against the investment property and while the loan is ideally self-servicing from the rental income derived from the property, servicing may also come from any other income received or assets held by the SMSF Trustee.
The loan may be limited in recourse, with the Bank’s right against the SMSF Trustee limited to the Bank’s right as mortgagee in relation to the property.There is no recourse to any other assets of the SMSF or to either the SMSF Trustee or Security Custodian.
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