Self-managed super funds (SMSF) are a wise way to plan for your financial future, but there are certain limitations on how such a fund can be used to borrow money to purchase an investment property. The amendments passed on superannuation legislation in 2007 now make it possible for trustees to apply for SMSF loans to purchase properties. However, even with the recent legislative changes, getting the right facility you need can be challenging. Global Capital Commercial is an industry expert in the growing field of SMSF loans and can help you structure the optimum facility that is both beneficial and manageable.
Who is GCC?
Global Capital Commercial (GCC) is one of Australia’s leading provider of property finance. With access to the nation’s best lenders, GCC is the obvious choice when it comes to structuring and facilitating the finance facilities you need.
Benefits of GCC
- Access to a nationwide network of over 200 bank and private lending institutions
- An in-house team of finance experts and specialists who are well-versed in the lending environment to Self managed Super Funds
- A wide variety of facilities to choose from
- Fast and efficient processing framework
- Customized Self Managed Super Fund borrowing facility plans that are tailored to suit your specific requirements
What is an SMSF Loan?
Self Managed Super Fund loans allows the trustees of a self-managed super fund to borrow money from a bank or private lender in order to purchase a property, be it residential, commercial, industrial, or rural. Technically the facility is procured by the Self-managed super fund which puts in a certain amount of equity for the purchase from its superannuation funds. The property is then purchased by a security trustee and held in trust for the Self Managed Super Fund, which acts as a beneficial owner of the property. Once the facility is paid back to the lender, the Self Managed Super Fund can acquire full legal rights to the property.
SMSF Loan Features
- SMSF loans are granted to Self Managed Super Fund seeking to acquire income producing properties, regardless of whether they are commercial or residential.
- In the case of a residential property, no member of the Self Managed Super Fund may use that property as a personal residence until such time as the property passes out of the Self Managed Super Fund and into their personal ownership.
- Any money borrowed through SMSF loans must be used to purchase the property or properties for which the facilities were granted.
- The purchased property is held in trust for the Self Managed Super Fund by a security trustee, with the Self-managed super fund deriving a beneficial interest from the property.
- SMSF loans are always offered on the basis of limited recourse. This means that if the Self-managed super fund defaults on the facility, the lender cannot touch any assets other than the property held as security when attempting to recover the funds.
SMSF Borrowing Categories
- Residential Property: These allow for a facility of up to 80% LVR and terms of up to 30 years.
- Commercial Property: These allow for a facility of up to 70% LVR and terms of up to 20 years.
- Rural Property: These allow for a facility of up to 65% LVR and terms up to 20 years.
SMSF Borrowing Restrictions
- SMSF loans may only be used to purchase assets – they may not be used for development or construction purposes.
- SMSF loans may not be used to purchase land that is vacant. All property purchased with a Self Managed Super Fund must be used for the purchase of an income producing property, such as a retail property or a working farm.
- There is no redraw facility available with Self Managed Super Fund facilities.
- A property purchased using SMSF finance cannot be leveraged for another facility, but it can be refinanced as long as it meets the SIS Act requirements.
- Any property purchases made using SMSF loans must be carried out as stand-alone purchases.
There are many benefits to using a Self Managed Super Fund acquire investment property for your future.
When contacting us through SMSF Loans Online, you are talking directly to our SMSF finance experts at Global Capital Commercial.
Contact GCC today to find out more about SMSF finance and to learn how we can help you get the property financing you need. Call 1300 353 92