Exit strategy using Superannuation

Discussion in 'Loans & Mortgage Brokers' started by RoadRunner, 12th Mar, 2020.

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  1. RoadRunner

    RoadRunner Well-Known Member

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    How much super balance one has to have in order to comfortably retire and be able to repay home loan?

    Say, I have $1m in super and seeking a loan of $500k. Comes retirement, I can repay loan fully and still left with $500k for retirement.

    What if I had $600k or $700k only in super?

    Question is, how much super balance one needs to have (at the time of retirement) to be eligible for a home loan now using "repay loan using super" as valid exit strategy?
     
  2. Morgs

    Morgs Well-Known Member Business Member

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  3. Paul@PAS

    [email protected] Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    This depends on a huge array of factors.
    The correct answer is - As much as possible.
     
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  4. Marty McDonald

    Marty McDonald Mortgage broker Business Member

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    It depends on your age and overall balance. Its not a black and white answer.

    If you had a $500K loan to repay at requirement age and your super balance at that time was projected to be $550K then that might not work for a lender especially if you were over 55 already for example.

    If however you were also sitting on a home worth $3M or something like that then obviously you could have down size options as well.
     
  5. RoadRunner

    RoadRunner Well-Known Member

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    I think I didn't put my question the right way. The question is related to lender's policies around acceptable exit strategy.

    I know lenders accept super balance as valid exit strategy. Logic is: At retirement customer can use super money to repay the loan.

    If super balance is $500k and loan sought is for $500k then obviously lenders won't accept it as valid exit strategy because once loan is payed customer will not have any money left for retirement.

    But if super balance is $1m, the money leftover(after paying off loan) is $500k which is reasonably sufficient to fund retirement.

    So, the question is:
    How much super balance is acceptable by the lenders(in order to approve loan of $500k)?

    Assuming no other assets or liabilities. Single. No dependents. No substantial cash or savings. Loan sought on 80% LVR.
     
  6. RoadRunner

    RoadRunner Well-Known Member

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    In your example, what if I have $1m projected super balance? The loan sought is for purchase of owner occupier. Downsizing is not an option.

    $550k as super balance is too low, $2m may be more than enough. I am looking for that magic number(sweet spot) where banks say yes you have enough money in your super balance (projected) to be eligible for a home loan of $500k.
     
  7. Marty McDonald

    Marty McDonald Mortgage broker Business Member

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    That would be enough all things being equal.