More often than not, some SMSF loan restrictions prevent you from making specific transactions.  Most of these due to government regulations attached to SMSF.  These include:

• Few lenders allow refinancing of your existing SMSF loans 
• Some banks have tight liquidity requirements for new SMSF borrowers, but other lenders have less strict policies.
• We only accept SMSF transactions for residential and commercial properties.
• While SMSF can pay for renovation purposes, borrowing additional funding for construction loans is not available.
• It’s not allowed to purchase a property under your SMSF for your personal residence (with your intent of living in it as a home). However, it’s allowed to purchase a commercial property for your own business premises.
• General industry consensus is not to recommend SMSF loan applications with funding of less than $300,000 equivalent in assets. Otherwise, the fees involved in managing your SMSF may overwhelm your potential returns.

For more information and insights, consider speaking with your financial planner or our staff to check if your desired SMSF transaction meets the lender’s policies and government regulations.

Unlike commercial and home loans, SMSF loans are relatively new for most lenders and banks. That’s why banks and lenders have very diverse policies and requirements to assess and approve SMSF loans.

To make sure you get the right lender for your SMSF loan, speak with us at 1300 052 055, and we’ll help you find a solution.

PLAN A Mortgage is here to help you apply for:

• Commercial property loan: Up to75% property value loan for non-specialised securities
• Loan rate: We’ll help you find lenders with considerable loan rate discounts.
• Standard SMSF Investment Loan: Some lenders offer up to 70-80% property value. We’ll help you find the best one for your investment. Keep in mind that your SMSF structure should comply with the criteria set by the lender you want to apply for.
• Bespoke income and security types: We have a network of specialist lenders that can assist you in unusual SMSF securities and income types.

Keep in mind that different lenders have various SMSF policies, while most of them offer similar loan rates. For more information, contact our specialist brokers at 1300 052 055 or contact us today.

More often than not, proving that you have enough deposit to support your loan application is the primary concern when applying for SMSF loans.  This is because the maximum LVR is 70-80% and there is no such thing as LMI in SMSF Mortgage.  You need to have enough funds to cover a 20-30% deposit plus all other legal costs, the biggest one being the stamp duty at around 4% of the purchase price.  So in reality you need to have a minimum of 25%- 35% deposit for a residential property purchase.   

In terms of borrowing capacity, lenders assess your SMSF through its past two years of the tax return to ascertain contribution history and income. After that, they will evaluate whether or not your current income plus future rental income from purchase property will service the debt.

In 2018, several lending giants withdrew from the SMSF market. Despite that, major banks and remaining competitive lenders still offer reliable commercial loan and residential investment services, particularly for SMSF.

Unlike standard home loans, where most lenders have similar fees and loan rates, SMSF loans cover a broad difference between interest rates and transaction fees.

Besides that, you may have problems finding a lender that can provide your mortgage with an offset account. That can become an issue, especially if you have large funding in your SMSF.

At Plan A Mortgage, we know which banks and lenders can provide offset accounts for your SMSF loan. Our broad network will also give you a bird’s eye view of all your options and find the one that suits you best.

Some laws are set in place to regulate the use of SMSF to apply for loans and prevent the lender from transacting when the trust isn’t sufficient to satisfy its repayment liabilities.

Here is a shortlist of the rules a trust must comply with when borrowing money:

• The SMSF should acquire interest from the asset
• The asset is one that the SMSF could legally acquire with enough funding
• When acquired, the asset should be kept in a trust for the SMSF via a security custodian or security trust (bare trust).
• The SMSF has the right to procure legal title when all loan payments are satisfied by the security trustee.
• The bank or lender must have limited options against an asset. In case of a loan default, the lender shouldn’t claim other assets of the fund.
• Every loan application can only be dedicated to a single acquirable asset. For subdivisions and strata titles, every title is treated as a single or separate asset.

Most lenders find SMSF as high-risk and low-profit ventures. That’s why most of the major lenders stopped lending to super funds. SMSF is a rather complex trust loan, smaller market sizes, and that their recourse is limited only to the asset.

In other words, it’s more work for them, all for lower profits and a higher risk of not recouping the money lent. Nevertheless, there is still a good number of lenders who find benefits in SMSF loans and offer loans to choose from.

To find your ideal lender that offers the best rates and features, seek help from our specialist brokers at 1300 052 055 or send us an email.

Before you’re out there looking for a property to invest in, we suggest you apply for an SMSF loan two weeks in advance.

While we can help you speed up the application process, it’s still practical to give ample time to prepare for unexpected changes and prevent disappointment.

If you’re considering an SMSF loan application, take the time to fill out our contact form and give our staff a call for your inquiries.

SMSF loan applications can take more time to get approval than usual home loans. We find that most of them take about a week to complete the application requirements from our clients. Then it will take another week for the lenders to evaluate and accept the pre-approval SMSF loan application.

SMSF lenders have broader policies and rates than typical home loans. That’s why it will largely depend on which lender you are applying with.

Besides, if you’re only applying to your current bank, they are more likely to charge you higher rates, considering that you’re a loyal and valuable client to them.

People often think that you can acquire a property in your SMSF without paying a deposit. However, you need to pay about 25-35% of the purchase price in cash to cover your deposit and other fees.

Some are more flexible lenders than others but keep in mind that several banks do not accept share/interest income from your existing trust assets.  That’s because they consider them as a liquid asset that can be sold at or exited anytime.

If you’re interested in finding banks that will include your income, along with other bespoke requests, call our expert mortgage brokers at 1300 052 055 or email us.

While you can use your self-managed super fund to acquire a commercial property from your personal portfolio, you cannot use it to purchase a residential property from you or any members, according to the current SMSF regulation.

Moreover, violating this policy can lead to large sums of penalty deducted from your superannuation fund. That’s why it’s always ideal to seek professional help, such as a financial advisor and SMSF advisor/auditor, throughout the process.

After completing the due diligence, please speak to our expert mortgage brokers if finance is required to accommodate the transfer. 

With the SMSF being a small market, you’ll only have a handful of lenders and bank managers that thoroughly understand and accept SMSF loans. You’ll find an even harder time looking for time-tested experts in SMSF lending.

Fortunately, PLAN A Mortgage has curated lending experts who can help you apply for an SMSF loan and get approved as soon as possible.  Call us for a free consultation at 1300 052 055!

PLAN A Mortgage cannot provide advice on any legal and compliance matters on SMSF.  We strongly recommend seeking advice from a Financial Advisor/SMSF Advisor/SMSF Auditor to properly set up the SMSF before contacting us.     

Applying for an SMSF loan can be a handful if you’re venturing without professional guidance.  PLAN A Mortgage is here to help you with the loan. Speak with our specialist at 1300 052 055 or fill out our contact form today!