Commercial/Industrial Loans for SMSF - Testing the water

Hi all,

This is me, married, 54yo, 7yo + 11yo, renting, no property, no shares anymore, single income family, no other income.:
Salary pa $179k
Super pa $17,900
Salary Sacrifice $9,600
Remuneration inc. super $196k
Car Lease (before tax) $5,635
Car Lease (after tax) $7,680
Taxable Income $173,360
Tax Payable $51,640
Income after tax $121,720
Take Home Pay $114,040
Savings Balance $320k
Superannuation Balance $340k
Super Contributions Cap $27,500

What's a good rate for a 70% loan for a $1m property in my SMSF assuming I'm a good risk?

I see calc's being done at 3.5% but I'm offered 4.95% which looks a bit high...

Cheers!

 

Get some financial advice about being 6 years potentially off being able to access super and liquidity issues. I am not sure what the rates would be but 5% is potentially the mark.

 

what calculators are being done at 3.5%? 4.95% for commercial property is sharp!

 

4.95 is not hight at all, used to be 7% You can get 4.7 odd at that lvr, remember to include purchase costs such as stamps and loan costs in your calcs

Cheers Ivan

 

my smsf has 5 plus interest rate. 2-3 percent are for individuals, while around 5 or so are for smsf.

it’s unclear why you decided to borrow now at 57 when you are not far away from your pension age. You would not be able to repay $1m property with your balance and you are gonna lose big time on stamp duty.

 

Once you go into pension mode, income is tax free - is waiting 3-13 years really that long?

However the exit strategy needs to be considered when purchasing - once you are in pension mode for the fund, you need to withdraw an ever growing % of capital from the fund - how will this be achieved without selling the property down the line?

 

The fund would likely be incapable of paying a pension AND the loan. Buying property just because you could is not an investment strategy. Forced disposal may even be required if cashflows rely on contributions and they stop. Or the tenant vacates.

 

Thanks to all for your responses. My intent was to secure an industrial/commercial property to demonstrate capacity to service a PPOR mortgage after retirement. Maximising my smsf contributions and refinancing along the way should see it paid off in 10-12years. I'm hoping to buy a PPOR shortly and should be able to realise some gains in residential property outside my smsf too by the time I retire. All of the above is subject to having someone check my modelling and provide proper advice. My final plan might be very different

 

BTW I'm happy to consider any and all suggestions for maximising my retirement income!