Whats a good interest rate for SMSF?

I am looking financing an investment property using SMSF. A major bank has qouted me 5.73% at 80% LVR for residential in a stable area. Since I am new to SMSF I am not sure if that is a good rate at the moment. Any advice and recommendations will be much appreciated.

 

Good loan product is more than rates whether it be for SMSF, credit cards, car loans, PPOR loans.
It needs to suit the SMSF purpose and strategy.
I would consult with a broker to get a comparison of the products out there to get a wider viewpoint.

 

Rates not bad, but as above there is more to it than a variable rate quote that can change at the banks whim.

Having an offset account in a super loan is important to a lot of clients etc.

 

Thanks guys, do you mind what you guys are using or recommending?

 

I am looking at the Canstar site and it only have 3 banks offering the offset facility by they are very expensive. you guys have any experience from the this list?
SMSF Loans - Compare SMSF Home Property Loans - Canstar

 

Borrowing 80% LVR will generally consume a load of cash and may be hard to get approval. Its a theoretical max. Contributions may not even cover the shortfall. Lenders have a cashflow buffer too...Satisfying both these issues isnt straightfwd and as Westminster says a experienced broker is a good contact

An offset would only help for a fund that has positive cashflow growth. Unlike property in your own name a smsf borrowing is about NOT negative gearing.

 

I've got an SMSF mortgage, at 6.53%, with offset. St George.

 

How expensive is it to make a mistake with your finance within a SMSF by focusing on a percentage point?

The lenders noted on Canstar are all the same lender, just different regional brands. There are other lenders which offer offset accounts which are not noted on that website.

You can DIY with the limited tools available for some of the most complex regulatory environments, or you can leverage off the knowledge of experienced professionals so you know you're setup in an appropriate finance structure from day 1.

 

Depends on the client and their circumstances, needs and plans.
Low rate isn't a need, or a plan.
I've written a couple of smsf loans, they were difficult and time consuming. I'd suggest getting a recomendation for an smsf specialist broker either here or from your accountant or financial planner.

 

me too 6.53% with St George

 

I'm on 6.3% through a private lender. No offset facility though. @Corey Batt above sorted my finance and I highly recommend his services due to his extensive knowledge of this space.

pinkboy

 

There are only two resi assets that are potentially CGT free upon sale . 1. PPOR held for more than 12 months and 2. resi property purchased through SMSF and sold in pension phase.

So an SMSF resi property should ( in my view at least) be approached in exactly the same way as a PPOR - the plan should be to use leverage to purchase, then pay it down as fast as possible and re-leverage if at all possible, to purchase additional properties.

However - unlike conventional resi lending, Limited Recourse Borrowing Arrangements ( SMSF loans ) have a particularly unique limitation, that makes this impossible if you select the wrong product. Whats the limitation? REDRAW. Put plainly, it IS illegal to redraw from a LRBA. But it IS NOT illegal to redraw from a linked account - such as an offset account. By making any extra repayments into the Offset account rather than the LRBA loan account , the ability to redraw is retained.

For this reason alone, offset functionality is to me at least, the single most critical feature for any LRBA product . It would only be unnecessary if I have zero intention to pay off the property and zero intention to re-leverage, or even maybe re-leverage, or even maybe have a chance to re-leverage, at some later point. The moment you choose to go without an offset you close off all those possibilities.... unless you sell of course and start over ....

 

Well said Euro73, problem is that the only mainstream lender offering an offset is taking the **** and have hiked rates almost 100 basis points in the last 12 months. That is
St George. So you are paying a premium for the offset - they are now 6.53% which is 100 basis points more than the rate I get with CBA supergear with no offset. Further, St George is hopeless with service, particularly with off the plan. Recently La Trobe increased current loan rates by 70 basis points which have left many raising their eye brows. I'm getting fed up with the way banks are treating SMSFs......

Cheers Ivan

 

He who holds all the Gold makes all the rules. If they were smart , one of the non banks ( the real non banks , not the mortgage managers or white labelers) would step into this space , offer P&I with an Offset and dominate the space. Hello Kim Cannon/Firstmac? Hello Resimac?

 

APRA have set the rules and SMSF loans are internally funded as high cost on a bank balance sheet

It will get worse and expect to see margins spread.

Personally I see a problem witn offsets and asked the ATO for a ruling. Still no answer. If a offset is capable of use for expenses or other investments I cant see how it can be a non recourse issue and be used to offset a loan to the custodian trustee. Thats like a trustee onlending the borrowed funds. I think there are trust law issues that prevent offsets. I hope to be wrong.

 

I also have my loan with St George at 6.53% with an offset however the value of the offset is debatable ( 0.7 of the deposit interest rate on the funds in the account offset against the interest on the loan = as good as useless ! and i pay a monthly fee for it)

I believe an offset is the a safe way of getting into a second property in the SMSF but it turns my stomach to have the cash parked in these circumstances. It has forced me to look at other markets to keep the cash but if there was such a product that would offset at the full 6.53% i would love to hear about it. Is there such a beast or am i living in a dream world?

Thanks tim