What is a self-managed super fund (SMSF) loan?
If you have a self-managed super fund or are considering setting it up, you are able to leverage it for a property investment. It’s a great way to grow and accelerate your retirement fund too.
SMSF loans are great for those who may not have enough funds for a property purchase because all that is required is an equity contribution. You then can borrow the remainder of the funds to complete the purchase.
SMSF into context
Here’s an example of how you could use your self-managed super fund loan to buy an investment.
Your SMSF has $150,000 in the account and you’re looking to buy a property for $500,000.
If a trustee is then to buy the property under this instalment arrangement, your super fund covers the deposit (10% so $50,000), then you obtain a 70% loan for $350,000. The remaining funds are paid from the reserve funds at settlement of $100,000.
From here the property is rented and using the combined income of the rent and member contributions the loan is paid off. Once it is paid off, the ownership is transferred to the SMSF.
All too complicated? Don’t worry.
Our team of mortgage experts will go through the process with you to make it extremely clear and transparent, so you have a total understanding of every step and requirement along the way.
Chat to one of our experts on 1300 088 065 now!
Benefits of SMSF Loans?
There are a number of benefits when it comes to using a self-managed super fund to purchase property including:
- Interest expenses can be claimed as tax deduction
- SMSF assets are secure
- Use the benefits of gearing
- Capital growth and income will be received by SMSF even if the property has not been paid off.
Key features to understand when it comes to SMSF Loans:
- Rent is paid directly to SMSF
- SMSF can payout or reduce the mortgage
- Purchase residential property as an investment
- Security of a limited resource loan
What is the SMSF Loan Approval Process?
Hunter Galloway’s team will guide you through this process so that it will be completed in a seamless and easy way. However having a general understanding of the approval process always helps. Take a look at the process below.
- Determine and establish your SMSF
- Obtain approval
- Set up property trust deed
- Property purchase contract is formalised
- Valuation set up and loan approval
- Lenders prepare and issue mortgage documents
If you’re thinking about setting up a SMSF loan, speak to one of our experts today. Call us on 1300 088 065 or send us an enquiry here.