Self-Managed Super Fund (SMSF) Loans
Residential
An SMSF loan is a home loan used by a self-managed super fund (SMSF) to buy investment property. The returns on the investment – whether that’s rental income or capital gains – are funnelled back into the super fund, increasing your retirement savings.
Commercial
SMSF commercial loan (opposed to a SMSF Home Loan) can be a great way to finance a business and is used by people who are looking to invest their superannuation into commercial property. Strong loan security is also one of the best method to increase your chances of approval.
Self-managed super fund property rules
You can only buy property through your SMSF if you comply with the rules.
The property must:
- meet the ‘sole purpose test’ of solely providing retirement benefits to fund members
- not be acquired from a related party of a member
- not be lived in by a fund member or any fund members’ related parties
- not be rented by a fund member or any fund members’ related parties
Are there any restrictions?
There are restrictions on SMSF loans which prevent some transactions from taking place. For example.
- Construction loans are not available. The SMSF is able to pay for renovations out of its own funds, but cannot use the borrowed additional funds for this purpose.
- Refinances of existing SMSF loans are only available from a few lenders.
- Buying a property in your SMSF that you intend to live in as a home is not allowed (owner-occupied business premises are acceptable).
- Selling a residential property to your SMSF, that you or a related party owns is not allowed (commercial property is acceptable).
- Banks have liquidity requirements when you borrow for your SMSF, but some lenders are less strict than others.
How much can I borrow?
Our Team can help you borrow:
- Standard SMSF Investment Loans: Up to 80% of the property value. However, please note that most lenders will restrict your loan up to 75% of the property value.
- Commercial property: Up to 70% of the property value for non-specialised securities.
Lending policies for SMSFs vary between lenders, particularly in the way they assess your ability to repay the loan.
If you would like more information on Self-Managed Super Funds, please contact the team at TFC today!