Best loans for SMSF property fund?

Hi friends at PC.

sorry in advance if this is a bit of loaded question. What i qualify as the better loans are great low rates and high LVR.

I am looking at funding my next investment using my Super. Where would be the best place(Banks, Small lenders, mortgage brokers) to look for a great loan for SMSF for properties.

Would be great if you can share contacts or recommendations.

Thanks in advance.

 

You should consider a loan with a long io period and a 100% offset account.

St g is a good option

 

As it is not possible to release equity from a SMSF property without selling it, there is a strong argument for a SMSF taking its time to repay the loan. Offset accounts help save interest yet offer flexibility of repurposing the funds later as deposit on another property, use to buy shares, etc etc.

 

There aren't many options left for smsf anymore. And the rates aren't pretty. St George, westpac, Macquarie liberty and AMP.

Make the choice, a good rate, I/O or 80% LVR. Many now only do IO at 70%, needs to be p&i for 80%.

 

Thanks Terry. What's their LVR like for residential property with land in a low risk area?

 

Thanks for your reply @tobe, are you a mortgage broker? How long would the process take to convert from Industry super to SMSF?

 

@tobe @JacM And would it be possible for P&I to converted to IO loans if we want the 80% LVR?

 

My understanding is that the maximum LVR on offer to SMSFs on interest only loans these days is 70%. Happy to be corrected if there is more up-to-date info from the brokers.

Either way, you can only ever refinance against the balance outstanding I believe (not the current market value).

 

Hi there

Firstly before you set up an smsf you want to see if its the best thing for you. Generally, understand the risks (compliance) and benefits (control, flexibility, choice, tax). Once you know its right for you then assess your borrowing capacity.

An SMSF can be set up in a day with an ABN ready. Your rollover can take 1-2 weeks if done right, request EFT to fasten the process.

Re loans, it will depend on the property you buy. St George (inc Bank of Mel) have a 70% LVR with a 10% liquidity requirement. They have an offset however the issue with them is their interest rates are 6.30% - can you believe that? to me, this is a major issue when CBA is 5.5%. Thats 80 basis points!

They are heaps of SMSF lenders - you just need the right one to suit your needs. Re P&I v IO - that can be considered however there may be loading.

Hope all works out however I strongly recommend assessing your borrowing power before you buy and importantly you need to set up the SMSF before you buy.

Cheers Ivan

 

Thanks Ivan, when it comes to assessing borrowing power, is it correct in assuming that it is purely depending on the total super accumulated and how much per month of regular contribution and not against any debts and assets outside of super?

 

Strong rumours that avenues for investing in property via SMSF are closing fast. Or perhaps restricted in some way.

 

No.

Personal guarantees are required

 

Are you referring to Mr Shorten's comments?

 

For most, yes that's what goes into the calculator. Living expenses, other debt repayments net payg income and rent are all excluded. As terry said though you need to provide a personal guarantee.

 

Depends on the lender and also if you are self employed v PAYG.

Cheers Ivan

 

Be very mindful in getting advice as to whether it's even appropriate for you to get a SMSF setup based on your specific circumstances. I've seen a few people as of late who have setup SMSF's with tiny balances/no practical reason or gain from doing this - so you have to ask why they're bothering.

Better to get quality advice early that you can leverage off, than make a mistake which costs you every year thereafter.

 

Sorry to dig up an old thread but are there any lenders out there that do SMSF resi loans with no personal guarantee? It kinda defeats the purpose of LRBAs.

 

none that i know of

 

Hi there

All lenders require a personal guarantee, remember in saying that, your SMSF $$$ are protected just you personally are responsible for the asset - limited recourse is that the smsf is protected, but you personally are on the hook in the event of default.

I do many of these and never had a default, generally 'most' lenders require a "liquidity test" to be met, which will protect the smsf to an extent.

Cheers Ivan