SMSF Home Loans for Buying Properties

An SMSF property loan is a home loan used by a self-managed super fund (SMSF) to buy residential or commercial investment property. The returns on the investment – whether that’s rental income or capital gains – are funnelled back into the super fund, increasing your retirement savings.

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Know About SMSF Lending

However, SMSF lending is complex and borrowers will need to ensure they have a qualified Accountant, qualified Financial Planner and a Lending Professional who understands SMSF loans and their requirements.

It is also important for buyers to note that Loan to Valuation Ratio are lower on SMSFs – usually only up to a maximum of 70%. Interest rates applied to SMSF Lending are a lot higher than normal investment loans. Buyers need to have a minimum of $200,000 in Superannuation fund balance to be eligible to set up an SMSF and they will require assistance from a qualified accountant and financial planner.

Generally, banks will look at the current income of the trust based on its previous two years tax returns and will then assess if that income plus the proposed rental income will be sufficient to service the debt.

Special Provisions of SMSF Home Loans

There are few transactions prevented in SMSF i.e. construction loans, buying a residential property where fund member or any related parties intend to live in, renting a residential property to fund member or any related party. If your SMSF purchases a commercial premise, it can be leased to a fund member for their business. However, it must be leased at the market rate and follow specific rules.

SMSF Lending can be a fantastic way of preparing for your financial future but having the right team of professionals is essential to help buyers understand the process and pave the way for a smooth transaction.

Consult your Lending specialist for more information about SMSF loans.

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