SMSF Lending

What is an SMSF?

SMSF is similar to other super funds, the difference is that an SMSF is managed by you. This provides greater control but also involves more effort and responsibility.

SMSF Lending

If you’ve thought about investing in property, but don’t have enough funds to make an outright purchase. You may consider borrowing money and using it via your SMSF in order to leverage many of the benefits of traditional residential property investment.

How does it work?

SMSF are based on a trust structure which requires a trustee. Trustees are legally responsible for the management of the fund, Inclusive of assets. Trustees have the responsibility of administering the fund to ensure compliance.

Summary of SMSF compliance includes but is not limited to:

  • A maximum of (4) four members or less
  • Members need to either be an individual trustee, or a director of a corporate trustee.
  • Members can’t be employed by other members of the fund unless those two people are related.
  • Trustees of an SMSF must not receive any payment for performing that role.

Important: 

SMSF Trustees considering a SMSF Property Loan must seek independent Financial and Legal advice.

Benefits

  • Use the rental income to repay your loan
  • Negative Gearing – You can offset loan interest and expenses against your rental income
  • Choose the right loan for your situation, Fixed, Variable or Split mortgage

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SMSF QUICK FACTS

  • SMSF can be used for investment property purchases
  • Loan Security, Residential or commercial properties can be used
  • There are only specific lenders which can cater for “Off the Plan” purchases.
  • We can refinance existing SMSF investment property loans
  • In certain instances loans can’t be approved until the SMSF trust deed and Bare/property trust deed have been vetted by panel solicitors.
  • Increases are not permitted after settlement once you’ve obtain an SMSF loan.
  • Property must be a minimum of 40 to 50 square meters in size to act as security. This is subject to criteria from each lender and can change based on the lender.
  • Certain lenders may request your accountants to provide proposed contribution letters for the upcoming or current financial year.
  • Customers must obtain their own independent financial and legal advice
  • Once loans are paid in full, and mortgage is discharged the legal ownership of the property is transferred from the trustee of the bare trust to the trustee of the SMSF.

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SMSF DOCUMENTATION – What you will need

The following list outlines the documentation that is generally required to obtain funding for an SMSF based loan.

  • Completed the appropriate Loan application form – iFinance will provide this.
  • Self-Managed Fund Documents
    • Certified copy of Deed Trust
    • Bank statements – Demonstrating member contributions
    • Company Trustee
      • Certificate of incorporation
      • Letter from accountant with confirmation that trustee does not trade
  • Property custodian
    • Certified copy of Deed Trust
    • Certificate of incorporation
  • Demonstrable evidence of loan serviceability
  • Financial Advice letter
  • Financial documents for the last 2 years
    • If self employed
      • Business Tax Returns and Financial statements
    • Individual
      • Individual Tax Return and notice of assessment
    • Existing Fund
      • SMSF Tax Returns and financial statements
      • SMSF account and loan statements
    • Evidence of Rental Income, copy of existing lease, Managing agents statement
    • Copy of the contract of sale

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