Commercial & SMSF
SMSF loans are when you use money in your Self-Managed Superannuation Funds to buy residential and/or commercial property.
Rather than leaving superannuation funds in the hands of others, many Australians look for a retirement investment strategy that provides them with more control over their finances. A self-managed super fund (SMSF) loan allows you to purchase property with your retirement savings as well as accessing a loan from a lender to make up the shortfall between your retirement savings and the price of the property.
One element of having an SMSF is that you might be able to borrow money to buy property using strict conditions known as a ‘limited recourse borrowing arrangement'.
With a SMSF loan you also have the flexibility and freedom to plan your retirement on your own terms and choose an investment to suit your lifestyle and investment goals.
What is an SMSF?
SMSFs are set up by a trustee or group of trustees who direct investment funds into it. They can be made up of different types of assets such as cash, Australian and international equities, Australian and international fixed interest, alternative assets and property.
As a trustee, you manage your fund using guidelines from the Australian Taxation Office (ATO). Please note that there are several regulations to prevent people from misusing their funds. SMSF loan terms and features will vary between lenders including interest rates, Loan to Value Ratios on residential or commercial securities and the loan term and amount.
The process of securing an SMSF loan will normally follow these steps:
1. Establish or review your SMSF
2. Work out the Property Trust Deed
3. Give instructions to solicitors, conveyancers
4. Obtain approval of your loan
5. Exchange contracts
6. Loan documents will be issued
Am I eligible?
You will need a reasonable amount of money in an SMSF, to begin with. You will also need to factor in costs for legal and financial advice, set up expenses, auditing and accounting services.
The ATO suggests having at least $200,000 to establish your fund. You also need the time to manage it yourself. Any Australian can start an SMSF but it is a good idea to brush up on your investment knowledge before you start. Please speak to your accountant or financial planner to discuss if this option is suitable for your requirements.
Commercial property loans are used by individuals, companies, trusts or self-managed superannuation funds to purchase commercial property. We can assist with assessing your risk levels and can also offer a range of loan structures & products that suit your needs.
The lending policies, pricing and regulations surrounding the commercial property loan space are complex, so obtaining the best deal can be confusing and time consuming for the investor.
By using the services of an experienced mortgage broker, you’ll ensure that you have strong negotiating power on your side.