You Have Plans - We Have Steps To Help You
- 9am - 5pm, Monday - Friday
- Suite 5 Level 1, 22 George St, North Strathfield NSW 2137
If you want to acquire a residential property under your SMSF, you’ve come to the right place.
When applying for an SMSF loan, banks and lenders will usually consider your current financial stability and loan amount, including your SMSF’s liquidity position.
That said, here is everything you need to know about how much deposit you can apply for your SMSF loan.
When applying for residential property under your SMSF, most lenders will require about 25% of the property’s value as a loan deposit.
Aside from that, you also need roughly 5% property value to cover the transaction and legal costs required to complete the purchase. That includes transfer and conveyance fees, stamp duty, and other legal expenses.
Banks and non-bank lenders typically ask for 30% property value as a deposit and 5% processing expenses for purchase completion for commercial properties.
More often than not, lenders usually follow the same application process for SMSF loans as they do with personal home loans.
They should require you to submit your latest payslip if you’re applying for Pay As You Go (PAYG). On the other hand, self-employed applicants may need to provide their income tax return two years prior as proof of after-tax income.
If they can find enough proof that you have a stable income and capacity to meet SMSF loan repayments, you have a good chance of getting approved in no time.
We also have a few lenders in our panel who will consider 100% of the residential property rental income you want to purchase using the SMSF loan.
By adding your proposed rental income to the equation, you can maximise your Loan to Value Ratio (LVR) and increase your chances of getting lower rates for longer loan terms.
To make sure banks are getting accurate and up-to-date info about your SMSF financials, you may be required to secure a certified copy of the SMSF trust deed.
That includes all the policies and regulations about borrowing money from the trust and earning interest from the property you’re planning to purchase.
Afterwards, lenders may require the SMSF to maintain a specified net worth, including investment dividends and existing assets.
Keep in mind that this value varies significantly among banks, and some lenders don’t require higher minimum values. Please speak with us at 1300 052 055 today to know more about the SMSF financial requirements.
If you have a personal guarantee for your SMSF application, you can find some banks that will include the beneficiaries’ income in the equation.
To know more about how you can maximise your borrowing power, we recommend seeking professional help from our specialist mortgage brokers.
Unfortunately, you cannot get approved for a loan without making the required deposit. You can use your SMSF account’s funds as your deposit on the bright side.
Interest rates and loan features significantly vary among banks. Depending on your lender and application strength, you may also get approved under the residential or commercial department.
With that, our specialist mortgage brokers at Plan A Mortgage can help you secure the lowest rates and loan features that best suit your needs.
Contact us at 1300 052 055 to speak with our team and discover whether you qualify for a loan.
As soon as you have passed the initial application process and thoroughly evaluated the property cost, your lender may require you to maintain a post-settlement liquidity requirement.
That means after completing the property purchase, the trust needs to maintain a specified income (and asset value). Most of the time, liquidity requirements will go around 20% of the property value and can go as high as 40% for applicants nearing the retirement age.
But keep in mind that not all banks implement a liquidity requirement, and it all comes down to finding the right lender for your SMSF loan.
To discover whether you have enough for an SMSF loan deposit and qualify for a loan, call us on 1300 052 055 or fill out our contact form today.
We’ll help you get through your requirements and find the right bank or lender who offers the best rates and SMSF loan features to suit your needs.
