Esuper SMSF resi loans

I finally got my 85 page SMSF document signed. It seems I can only go through Esuper for resi home loans which is cba, bank of Melb, Macquarie and resimac

SMSF Property - Rates & Fees for Residential Property | ESUPERFUND

Any thoughts which is the best ?

 

Personally I'd only go for a lender that offers an offset, its a way to maintain some liquidity in an SMSF.

Not sure why you say you can only go through Esuper?

 

Hi there- Esuper is quite limiting in terms of banking (i.e can only use certain banks) and loans - thats how they make their $$$.

The four lenders you mentioned are quite tough on servicing and may have minimum balance requirements (i.e Macquarie $200k in SMSF same as Resimac) and also will require 10% liquidity at settlement. They are also extremely tough on servicing inside and outside SMSF. I would not use CBA at all. Bank of Mel / St George is slow. Certain lenders will exclude off the plan (i.e resimac) and BOM has a max LVR of 70%.

I suggest you use a SMSF broker. By contacting a broker you can obtain access to a variety of specialist SMSF lenders out there, one currently has a rate of 5.65% with 80% LVR and a offset account with no minimum balance.

Also be sure your fund is structured correctly before you proceed, many set up a fund for free with Esuper and when it comes to buy property we set them up with a corporate trustee and also establish the bare trust with corporate trustee. Generally you will need to ask questions during the process and this is where I have found that Esuper falls down. It may be right for the absolutely switched on SMSF investor however those who require tender loving care will call us to clean up the mess. This is important as we know - SMSFs are all about strategy.

Hope that helps

Cheers Ivan

 

Last I heard you're not welcome to play in the CBA SMSF mortgage sandpit unless your SMSF has at least $300k in cash or assets, which rules a lot of folks out anyway.

Of the other lenders, it may turn out to be a matter of "the best is the one that will actually lend to you". The lending criteria of one might cancel them out anyway. Don't overthink it too much, check which ones you would actually service up with and choose from there.

 

Hey JacM - CBA is min $200k - not recommended and usually used by a SMSF investor who walks into a branch....gets messy on many occasions. They are not a leader in the SMSF market.

Macquarie has been quite popular after the AMP exit - due to the fact that they do 80% LVR on Off the plan - however their servicing is extremely tough. Important to get a pre-approval done to start the journey instead of a decline letter if your not careful.

On the corporate trustee point - we only deal with Corporate Trustees - and now most banks will require a corporate trustee for the SMSF ... and of course the bare trust. Individual trustees are a massive no-no in my view. Like I say - Esuper is a great product, however we get one transfer a week when members need to questions answered.

Cheers Ivan

 

We have purchased two Resi IPs with BOM, via our eSuperfund SMSF.

We didn't find the process too challenging at all, but slightly convoluted as you have a middle man between you and the bank. All of our questions were answered via email or return phone call rather promptly; most emails within 15-30 minutes.

The BOM product does offer an offset. It's working well for us.

I have heard of people choosing SMSF brokers after they signed with eSuperfund being kicked out by eSuper for breach of the agreement.

 

yeah that's what i thought. you only meant to use the 4 banks nominated by esuper to get the free accounting and management for the first 1.5 years. As for the liquidity "10% of SMSF Assets" is that prior or after settlement.

 

Hi there -

10% is after settlement (edited for accuracy) meaning you need 10% liquid assets at settlement - liquidity can include shares and cash....

I don't want to bash esuper - they are a great model - however you don't do free set ups and free first 2 years for nothing - they are making their money somewhere.

BOM is St George and has offset yes - however, they can be very slow - I donot use them for clients requiring settlement <45 days.

Yes, most people are happy to pay the $699 penalty - as I say they may need tender loving care.

Jeah - I am happy your SMSF loans process was smooth - lets hope you can keep your feet up and achieve capital growth and awesome yields on your property over the journey!

Cheers Ivan

 

@Redwood when you say you need to have 10% after purchase is that-SMSF has a balance of 300k of which 270k was used for deposit leaving 10% (30K) remaining after deposit costs etc?

 

The 10% liquidity is you need to have more than 10% of the total value of your property, after the purchase, as liquid assets i.e. Say you want to purchase a house for $350k, using BOM, your max loan at 70% LVR will be $245k. That means your deposit will be $105k +fees+legals etc. after all that, you will be required to show that you still hold > $35k in liquid assets in your SMSF, and your SMSF contributions along with the rental income will be enough to service the loan, for approval.

@Redwood - both our BOM loans were ready to be settled well before the 30 and 42 day periods, in spite of my initial angst reading their application timeline guide.

Like yourself, I can only speak from experience. I wouldn't call us absolutely switched on investors, but we do ok. I'm sure there are people out there with less understanding or interest than us that you are providing a great service for. Wemayecen come knocking at your door one day when we want to diversify our SMSF even further, outside the bounds of what eSuperfund can assist with. At the moment it's been a great start-up product for us.

 

i think the resimac one is the only one that suits me. i'm like 30+ year to being able to access my super hence not a very a large amount in there.

 

Just beware with the Resimac product, you are required to show that you have sought legal advice for the loan product. This may cost you a few thousand dollars for a legal professional to go through the required documents (mortgage document, trust deeds, undertakings etc), explain them to you and sign a document to say that they have.

 

Hi Jeah,

This is your nest egg for the future, I would encourage all to enter legal advice to understand the risk and benefits. You should quite experienced, so you would not benefit. But I cringe at the number of people who simply sign and not really understand the set-up.

Jeremy

 

That's a great point, Jeremy, and I agree. My comment was from a viewpoint that a lot of people look at the Resimac product because it looks cheaper up front.

Like everything else financial and investing, it is imperative that people do their own due dilligence and seek professional advice for their personal situation when making potential life impacting decisions.

Yes, we are reasonably experienced, but we still rely on our team of professionals for advice frequently.

 

So to buy a sub $150k property at 80% LVR. One need $30k+$10k(stamp, legals)+$15k(10% reserve) = $55k. Is there a minimum fund size and loan size? Or will it do if someone has just $55k?

 

I can't comment on something like that as I've never seen anyone with that small of a balance setup an SMSF. Not saying that you couldn't.

I think you'd probably want the advice of an SMSF advisor/broker, like @Redwood to assist with finance for this. As stated up thread, most of the bigger lenders require a balance of >$200k

 

is that for pre-approval as well?

 

Nope - you will get a indicative with Resimac pretty quick and they do not require legal advice on all deals - unless this is something specific to Esuper referrals?

Resimac is quite limited and service in and out of smsf - so be very careful before proceeding. They exclude off the plan or any properties less than 12 months.

Actually they are hard work and much like BOM can be slow.

If you are looking for a refinance Resimac is good their rate is attractive and small fees for app and legals. They use Gadens so make sure your Deeds are done right otherwise they will pick it up and add $$$ to the overall loan.

Cheers Ivan

 

I'm not sure what you mean?

Sure, you can get pre-approval for the Resimac product without showing you have obtained legal advice, but if you wish to progress with the application, you will need to get an Australian Legal Practitioners Certificate 1 & 2, or similar, signed by a suitably qualified person.

If you don't wish to progress, I don't see the point of obtaining pre-approval?

 

Yes, it is.

More details here;

SMSF Property - Rates & Fees for Residential Property | ESUPERFUND