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SMSF HOME LOANS

Unlock the potential of your Self-Managed Super Fund (SMSF) with our tailored SMSF home loan solutions. At Assured loan & mortgage services, we specialize in helping individuals harness the power of their superannuation to invest in property with confidence and flexibility.

Why Choose an SMSF Home Loan?

SMSF home loans offer a strategic avenue for diversifying your investment portfolio and building wealth for retirement. By utilizing your SMSF to invest in property, you can benefit from potential capital growth, rental income, and tax advantages available within the superannuation framework.

Expert Guidance and Support

Navigating the complexities of SMSF lending requires specialized knowledge and expertise. Our team of SMSF lending specialists brings years of experience and industry insight to the table, ensuring that you receive expert guidance and support at every stage of the loan process.

Tailored Solutions for Your Needs

At Assured Home Loans, we understand that every SMSF is unique, and we take a personalized approach to meet your specific financial goals and circumstances. Whether you’re a seasoned investor or new to SMSF lending, we’ll work closely with you to structure a loan solution that aligns with your objectives and maximizes your investment potential.

Comprehensive Range of Products

We offer a comprehensive range of SMSF home loan products to suit a variety of investment strategies and property types. Whether you’re purchasing residential property, commercial real estate, or considering refinancing an existing SMSF loan, we have the expertise and resources to help you achieve your goals.

Start Your SMSF Property Investment Journey Today

Ready to take the next step towards unlocking the opportunities of SMSF property investment? Contact our team today to schedule a consultation. We’ll provide you with personalized advice, assess your eligibility for SMSF lending, and guide you through the process with confidence and clarity.

How SMSF Home Loans Work?

Home loans for SMSFs, or Self-managed Super Funds, are typically set up as Limited Recourse Borrowing Arrangements (LRBAs). This means that if you are unable to keep up with your loan repayments, the lender only has rights to the specific property purchased with the loan, not to any other assets within your super fund.

Benefits of SMSF Home Loans

There are several benefits of using an SMSF home loan to purchase a property:

Tax Efficiency Opportunities

By leveraging the preferential tax treatment on rental income and capital gains, acquiring a property via your SMSF could yield notable tax efficiencies.

Diversification of Investments

Property investment through your SMSF facilitates a broadening of your superannuation asset mix, offering a well-rounded portfolio.

Increased Autonomy

As an SMSF trustee, you enjoy a higher degree of autonomy over investment choices, empowering you to select property that seamlessly integrates with your fund’s investment strategy.

Adaptability to Individual Scenarios

An SMSF home loan proves to be an excellent option for those who are self-employed, boast multiple avenues of income, or have exhausted their personal borrowing capacity.

Potential for Capital Gains

As property values appreciate over time, the SMSF can accrue capital gains, potentially generating a significant source of income during retirement.

Lending Rules for SMSF Home Loans

The requirements for purchasing a residential property with an SMSF loan are designed to ensure that SMSFs are used for their intended purpose of providing retirement benefits to members.

The requirements also help to protect SMSF members from making risky investments. Key requirements for purchasing a residential property with an SMSF loan are:

SMSF Compliance

The SMSF must be set up and structured as a complying superannuation fund. This means that it must comply with all applicable Australian superannuation laws and regulations.

Sole Purpose Test

The property purchased with the loan must meet the sole purpose test. This means that it is bought solely for investment purposes and not for personal use. The property must not be lived in or rented by a member of the SMSF or any related party of a member.

Sufficient Funds

The SMSF must have enough funds to cover the deposit, fees, and ongoing repayments. The deposit is typically at least 10% to 20% of the purchase price of the property. The fees include the lender’s application fees, valuation fees, stamp duty and legal fees.

The ongoing repayments include the principal and interest on the loan, as well as any other property-related expenses, such as council rates, water rates, and land tax.

Cash Flow

The SMSF must have enough cash flow to support loan repayments and other expenses. This means that the SMSF must generate enough income from its investments to cover the loan repayments and any other property-related expenses.

Property Location & Rental Income

The property must meet standard lender requirements for residential properties. This means that the property must be in a desirable location, have good rental potential, and be in good condition.

Key Features of SMSF Home Loan Products

Below are some key features of SMSF home loans:

Limited Recourse Borrowing Arrangement (LRBA): SMSF home loans are structured as LRBA, which means that the lender’s recourse is limited to the property held as security. This protects the other assets within the SMSF in the event of default.
Borrowing Capacity: SMSF home loans typically allow borrowing up to a certain percentage of the SMSF’s total assets, usually capped at 70-80% of the property’s value. This borrowing capacity may vary depending on factors such as the lender’s policies, the property type, and the financial situation of the SMSF.
Property Types: SMSF home loans may be used to purchase various types of property, including residential homes, apartments, commercial real estate, and industrial properties. Some lenders may have restrictions on certain property types or locations.
Loan Terms: Loan terms for SMSF home loans typically range from 15 to 30 years, similar to traditional home loans. Borrowers have the option to choose between variable, fixed, or split interest rate options, depending on their preference and risk tolerance.
Interest Rates: Interest rates for SMSF home loans may be higher than those for traditional home loans due to the perceived higher risk associated with borrowing within an SMSF. However, borrowers can still shop around for competitive rates and negotiate with lenders to secure the best possible deal.
Deposit Requirements: Lenders may require a minimum deposit or equity contribution from the SMSF, typically ranging from 20% to 30% of the property’s purchase price. This ensures that the SMSF has sufficient equity in the property and reduces the lender’s risk.
Loan Structure: SMSF home loans may be structured as interest-only or principal and interest repayments, depending on the borrower’s preference and financial strategy. Some lenders may also offer features such as offset accounts or redraw facilities to help borrowers manage their loan more effectively.
Compliance Requirements: SMSF home loans must comply with strict regulatory requirements set by the Australian Taxation Office (ATO) and the Australian Prudential Regulation Authority (APRA). Lenders will assess the SMSF’s compliance with these regulations before approving the loan.
Legal and Administrative Costs: Borrowers should be aware of the additional legal and administrative costs associated with setting up an SMSF and establishing an LRBA. These may include legal fees, valuation fees, and ongoing compliance costs.
Exit Strategy: Lenders will typically require borrowers to have a clear exit strategy in place to repay the loan within the agreed term. This may include selling the property, using rental income to make repayments, or making additional contributions to the SMSF.

What is the Maximum Amount an SMSF Can Borrow?

The maximum amount an SMSF can borrow is generally up to 80% of the property value, with some lenders offering up to 90%. However, this may vary depending on the lender and their lending policies.

It’s important to note that borrowing capacity for an SMSF loan will also depend on the cash flow and liquidity of the fund.

Lenders will assess the ability of the SMSF to make loan repayments using rental income, super guarantee contributions from members’ employers, pre-tax and post-tax voluntary contributions from members, and other sources of income of the SMSF.

In addition to the property value and cash flow of the SMSF, lenders also consider the individual circumstances of each borrower, including credit history, employment status, and personal income.

Government Schemes for First Home Buyers in Victoria

Purchasing your first home can feel daunting, especially with rising property prices. But worry not, aspiring Victorian homeowners! The Australian government and the Victorian state offer a wealth of programs specifically designed to help first-time buyers like you navigate this exciting journey.

From easing the burden of upfront costs to maximising your savings potential, these schemes can be your key to unlocking the door to affordable home ownership.

Explore these options and discover which ones best suit your financial situation.

Seek Independent Advice

Seeking professional and independent advice for an SMSF loan is a prudent step to ensure you make informed decisions and navigate the complexities of SMSF borrowing effectively.

Professional advisors, such as financial planners, accountants, and SMSF specialist mortgage brokers, possess in-depth knowledge of SMSF regulations, tax implications and lending requirements.

They can guide you through the intricacies of SMSF borrowing and help you identify the most suitable loan structure and lender for your specific needs.

Conclusion

SMSF home loans offer a unique opportunity to leverage your superannuation savings to invest in residential property. This strategy can potentially enhance your retirement savings and provide a source of income in retirement.

However, it is important to carefully consider the risks and suitability of SMSF home loans before taking one out. Seek professional advice to ensure you make informed decisions and navigate the complexities of SMSF borrowing effectively.

Apply for SMSF Home Loan with Assured Loan

Applying for an SMSF loan for purchasing or refinancing a property can be a complex process, and it’s important to have the right team behind you.

Our experienced mortgage brokers can guide you through the entire application process, from understanding borrowing capacity to selecting the best lender for your SMSF.

Call Assured Loan Mortgage Broker Adelaide on 0430 451 901 or click the button below to send us an email.

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