Top 5 Myths and Questions

Over the last decade, here are my all time top 5 Answers to the most common questions!

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Can I refinance my current SMSF loan?

Yes! If you currently have an SMSF loan, you can refinance to another Lender. Many customers save considerable amount of money when moving to a new lender with a lower rate. You must meet the new lenders credit criteria and a specialist SMSF broker will be able to help you. Click here to contact us for more help.

How Much Can I Borrow?

Contact us for help if you want to apply for:

• Standard Residential Property SMSF Investment Loans: Up to 80% of the property value. Lenders can offer up to 90% of the property value, but this will include additional risk based fees.

• Commercial property SMSF Loans: Up to 80% of the property value for non-specialised securities. Some restrictions apply to certain commercial property types with lenders.

• Amount – most lenders have loan limits of $1.5 to $2m due to asset super cap rules, meaning at 80% lend, the maximum property you should be looking at is $2,500,000 (80% loan is $2m). All lenders vary.

• Interest Rates: These change regularly and vary widely with each lender. See our Rates table here

• Low doc (no income evidence): Not typically available.

• Bad credit: It’s the SMSF that is assessed for servicing the loan, not the individual or SMSF member (guarantor), so having some credit issues is usually not a large barrier, but this is a case by case issue.

• Construction finance: SMSF construction finance isn’t typically available. We have options where this is available - contact us.

• Off the plan purchases: typically not available for SMSF. Some options can exist for this scenario - contact us.

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Are there any restrictions for SMSF Lending?

There are restrictions on SMSF loans, but also some "urban myths". Dont believe the hype, some experts and web sites have information which may be different to us. We try and help every SMSF with every scenario if we're able. If its within the law, we will find a way.  In general, properties must be built and ready to use when makes the SMSF purchase.

• Urban Myth:  Construction loans are not available. Not true. You need to be very careful, but structured correctly, we can arrange New Build / Construction Loans for you.

• Urban Myth: Off the plan purchases are not available. Not true. You need to be very careful, but structured correctly, we can arrange a New Build off the plan & Construction Loans in some cases.

• Cash Out / Equity Release – not available - the SMSF is able to pay for renovations out of its own funds, but can’t use the borrowed additional funds for this purpose.

• Owner Occupied – not allowed - buying a property in your SMSF that you intend to live in as a home is not allowed. Even renting to a relative is not allowed – the lease must be at arms length. However, owner-occupied business premises are acceptable.

• Holiday or vacation home – not allowed – if you intend to occupy the premise even for a week a year.

• Selling a residential property to your SMSF, that you or a related party owns is not allowed. However, owner-occupied business premises are acceptable to sell into your SMSF.

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What is the Structure for an SMSF Property Loan?

In any SMSF borrowing arrangement, the lender lends to the SMSF trustee who doesn’t actually hold legal ownership of the property.  In order to meet Super laws (SIS Act requirements) and non-recourse borrowing, there is a Bare Trust and company trustee is set up to hold the property.

You should speak to your accountant when considering entering such an agreement.

In addition to this requirement, the bare trust trustee must be a company with company directors who are members of the SMSF.

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What are the downsides to SMSF Property?

• You cant live in it or even occasionally holiday in it

• You cant access redraw / equity release from the loan for renovations (you must use the SMSF cash for this)

• Interest rates are slightly higher than regular residential loans

• More paperwork – there is more paper work in the application for a SMSF Loan

• Construction or Off the Plan sales are generally not allowed, but in we have solutions for this.

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