SMSF MOrtgage Broker - brisbane

 Self-managed super fund (SMSF) is a special set up, where you run your super fund and choose how your super is invested, including property investment. You are growing your nest egg through the capital growth and/or rental returns of the property.

You can buy a residential or commercial property but the transaction needs be at arm's length.

A SMSF is highly regulated. You are bound by rules set by the Superannuation Industry Supervision Act and need the guidance of financial professionals such as accountants and financial planners.

Specialty Home Loans can assist in working out the borrowing capacity of your SMSF and provide lending and refinance options for your SMSF. 

 Normally you a SMSF can’t take out a loan, however the exception is when a holding trust called a bare trust is set up to hold the asset and take out a loan on behalf of the SMSF. 

Super contributions and rent are directed into the SMSF and home loan repayments and property expenses are paid from the SMSF. 

When the loan is paid off, the property title transfers to the SMSF. 

SMSF lending is carried out under a special arrangement called limited recourse borrowing arrangement. Essentially under this arrangement, if the fund defaults on the loan, the lender does not have the ability to claim the SMSF’s other assets, just the security property.  

You can buy residential or commercial property.

The property cannot be for personal use except in the scenario where your business leases the commercial property as business premises from the SMSF.

 There are many reasons people choose to invest in property in SMSF. It is recommended you seek advice from a financial planner before going down this path to ensure this strategy aligns with your situation and goals. 

Common reasons for buying property through SMSF include: 

• Taxable income earnt through SMSF property is taxed at 15%. during accumulation phase and potentially 0% during pension phase.
• Capital gains are taxed at 10% for property held in SMSF for 12 months or longer. 
• Freedom to decide how super money is invested. 
• Ability to buy property when personal borrowing capacity is reached. When taking out a loan for SMSF, the lender does not assess the fund member’s personal loans/liabilities.  
• SMSF buys a commercial property and leases it back to member’s business. 

Limitations of buying property through SMSF include: 

• Property cannot be for personal use such as holiday house. 
• Cannot lease property to relatives. 
• Set up costs of trusts ($2000-$3000) and annual audit requirements ($2000-$3000) 
• Cannot obtain loan through SMSF for construction, renovation and subdivision. 
• SMSF have higher interest rate and borrowing costs. 

There are lenders who can lend up to 90% (including lender’s mortgage insurance) of the property’s value.  

Like a regular loan, income and liabilities are part of the equation in calculating borrowing capacity.  

Income includes income derived from the SMSF and super contributions (voluntary and non-voluntary). The member’s income is not used in servicing calculations. 

Liabilities includes loans associated with the SMSF. 

This is a question we get asked a lot and there is no definitive answer. 

Some lenders require a minimum net tangible asset value (available funds in the super) of around $120,000 to $150,000 while other lenders set no minimum value. 

Some lenders require a certain percentage of funds retained after the transaction to cover property and SMSF expenses and maintenance.  This know as a liquidity test.

Funds from your super needs to cover the deposit (typically 20%), SMSF set up costs, stamp duty and borrowing costs. There needs to be enough balance to cover the costs for buying your desired property. Feel free to reach out to us to find your SMSF borrowing limit. 

Not all mortgage brokers can assist with SMSF loans as some lenders require brokers to undergo specialty accreditation and training. 

Specialty Home Loans is accredited with a panel of SMSF lenders so can provide options to suit different types of properties and super balances. 

Call Specialty Home Loans - Brisbane SMSF Broker.

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