SMSF Residential Investment Loans

There are significant rules and regulations in place to govern the management of your superannuation in order to protect your retirement savings. Until recently for instance it was not possible for a superfund to borrow funds for investment purposes. This ban has now been lifted and superfunds, including self managed superfunds, are able to borrow money to directly purchase real estate or shares in order to further the investment portfolio of the fund.

  • Up to 75% loan to value ratio (LVR) on Metropolitan Houses / Townhouses
  • Up to 70% loan to value ratio (LVR) on Metropolitan Apartments and Major Regional locations.
  • Up to 60% loan to value ratio (LVR) on off the plan and for inner city apartments
  • No minimum balance in the super fund. We recommend that you seek independent financial advice
  • Some credit impairment accepted (on the guarantor members credit report)

Things the Borrower should do before they buy an investment property within their SMSF

The individual needs to:

  • Seek independent financial and legal advice with respect to their SMSF borrowing money to purchase an investment property (we do not require confirmation but this is a requirement of the Superannuation Laws).
  • Establish the trust structures required for the loan, ensuring this complies with the relevant Superannuation laws. The loan would then need to be taken out by the SMSF Trustee.
  • Set up a separate Property Trust, which will be the legal owner of the property.
  • To purchase the property, the SMSF can use the cash funds it has available and borrow the remaining amount plus other associated costs. The investment property will be the security for the loan.
  • The Property Trust becomes the legal owner of the property while the SMSF is the beneficial owner and receives the rental income. When the loan is repaid, the Property Trust will transfer the legal ownership of the property to the SMSF.
Loan purpose Investment purposes only.
Loan term 10  > 30 years.
Interest type Variable rate.
Repayment type Principal & interest
Repayment options Monthly, fortnightly or weekly.
Repayment method Direct debit only.
Maximum Loan Amount $2,000,000
Credit history Past credit impairment can be considered at higher rates and fees
Minimum equity No minimum net asset requirements. We recommend that you seek independent financial advice
Minimum loan size $100,000
Acceptable guarantors All adult members and associated trusts.
Serviceability Acceptable income may include superannuation contributions and any SMSF income [rental income is acceptable at 80%).
Security type House, townhouse or unit within acceptable locations
Income Verification Documentation required to verify income for all SMSF members. Self-employed members without tax returns can be considered at higher rates and lower lvr.
Superannuation contributions by SMSF members for current and previous years will need to be confirmed.
Existing SMSF Where an SMSF already exists, constituent documents will also be required.

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