Frequently Asked Questions

Yes, SMSFs can borrow money to invest in property, managed funds or shares provided they use a Limited Recourse Borrowing Arrangement (LRBA). Lending to SMSFs is heavily regulated and operates under a stringent set of rules. It’s essential to seek expert guidance from professionals in the know — get in touch with us to learn more.

Your SMSF can buy real estate by borrowing money through what’s called a limited recourse borrowing arrangement (https://smsfloanexperts.com.au/lrba-limited-recourse-borrowing-arrangements/)or LRBA. The trustee then uses those funds to purchase a single asset (or collection of identical assets that have the same market value) to be held in a separate trust. Any investment returns earned from the asset go to the SMSF trustee. Should the loan default, the lender’s rights are limited to the asset held in the separate trust, safeguarding the other assets held in the SMSF. Unfortunately, many lenders now require a personal guarantee from the trustees. So while the assets and funds in the SMSF are protected, the lender can gain access to the trustees’ personal assets.

No. It wouldn’t be compliant with the ATO borrowing rules and there are no lenders offering progress payment options for SMSF loans.

Unfortunately not. The only way to access and use the equity in an existing property would be to sell it.

Under current legislation, lenders are required to hold more capital for SMSF loans than they do for standard residential loans. These loans are more costly to the lender, who in turn passes the costs on to the SMSF. Read here (https://smsfloanexperts.com.au/smsf-loans-expensive-standard-residential-loans/)for more details on this.

An SMSF can generally borrow up to a maximum of 80% of the property or asset value they’re looking to purchase with the loan. This is the LVR (loan-to-value ratio). For example, if an SMSF wants to purchase a house with a value of $1 million, they would be able to get a maximum loan of $800,000.

Some lenders require that not all of the liquid asset (cash or shares) in the SMSF be used to purchase a property and impose a minimum requirement. For example, they may require the SMSF can still show 10% of the property value in either shares or cash after the settlement of the property. Learn everything you need to know about liquidity requirements here.(https://smsfloanexperts.com.au/smsf-liquidity-requirements/)

Delays often relate to the time it takes to legally assess the two trust deeds, but lenders continue to improve settlement timeframes.

Absolutely! We can even arrange for one of our lenders to give you an SMSF loan pre-approval before your SMSF has been setup.

SMSF loans are called LRBAs (Limited Recourse Borrowing Arrangements). LRBAs are No Recourse loans, which means the lender has no access to other assets owned by the SMSF in the event of a default. To get around this, banks require the trustee(s) to personally guarantee the LRBA.

Yes, for up to 5 years.

Yes, for up to 5 years.

Absolutely. We specialise in SMSF loans, but continue to assist many clients across all forms of lending: ✓ Refinance loans ✓ Home purchase loans ✓ Construction loans ✓ Debts consolidation loans ✓ Personal loans ✓ Low doc loans ✓ Bad credit loans Check out our SMSF loan and setup services.

Due to being a specialised type of lending, only some banks will give loans to an SMSF. In 2018, many of Australia’s largest banks ceased SMSF loans. Now, there are only a select few second-tier lenders who continue to offer SMSF loans. Your choice of lender is even further narrowed down by whether you’re looking to borrow for commercial or residential purposes. Some of the banks that give loans to SMSFs include (but are not limited to): ✓ Bank of Queensland ✓ Switzer Home Loan ✓ La Trobe Financial ✓ Liberty Financial ✓ Mortgage House ✓ Reduce Home Loans ✓ Granite Home Loan ✓ Mortgage Mart ✓ Think Tank ✓ Firstmac ✓ Better Mortgage Management

An SMSF loan is a unique loan product offered to self-managed super funds for the purpose of investment. Similar to the mortgage on your home, SMSF loans are used to purchase either residential property, commercial property or another single acquirable asset. Compared to personal mortgages and investment loans, SMSF loans are quite complex and have strict rules and regulations that govern them.

Without seeking professional advice that takes your personal and financial situation into account, it’s impossible to say whether a self-managed super fund is worth it for you. SMSFs certainly offer many benefits over traditional APRA-regulated funds, such as better investment choice and control over your retirement savings because they are private super funds that you manage yourself. There are responsibilities and costs that come with establishing and maintaining a self-managed super fund that require time and money. You also need to seek the assistance of a Legal Practitioner and Accountant. With the right team on your side, an SMSF could be the perfect way for you to boost your retirement savings.

If you are an astute investor or have sound financial understanding and wish to have better control over your superannuation investments, then an SMSF could be a good idea for you. As a member of an SMSF, you are responsible for all of the fund’s decisions and must ensure that the super fund complies with the law. Generally, you will need to engage a legal practitioner, accountant and often a financial planner specialised in SMSF planning to establish and maintain the fund. It is useful to keep in mind that SMSFs tend to have much higher establishment and ongoing costs than traditional super funds — but can be well worth the investment! Of course, without knowing your personal circumstances, we cannot comment on whether an SMSF is a good idea for you. Be sure to speak to your adviser to discuss your circumstances before making a decision.

It is extremely unlikely that a super fund would ever go broke. APRA regulated funds such as industry or retail super funds diversify their assets; that is, they don’t put all their eggs in the one basket. So, while one of the investment options they offer could freeze or potentially suffer negative returns, the overall super fund is held up by many other investments. It’s important to remember that the money you have in superannuation is being held in trust for you by the superannuation company, not with the superannuation company and is invested across different types of assets with different fund managers. If you have a self-managed super fund, it is highly unlikely that you would ever lose 100% of your balance due to poor investment performance, assuming you hold a diversified portfolio of assets. Even in the instance of going bankrupt, your superannuation isn’t considered divisible property. This means that a person’s bankruptcy trustee cannot recover or sell the assets of the self-managed super fund.

You can buy a car with your SMSF.(https://smsfloanexperts.com.au/can-smsf-purchase-collectable-car/) However, there are some fairly strict rules around it. You have to comply with the Superannuation Industry (Supervision) Regulations (1994) which detail all of the rules around an SMSF purchasing personal use assets such as cars. These rules include the SMSF needing to meet the Sole Purpose Test. The sole purpose test specifies that SMSFs have to invest with the exclusive purpose of providing benefits to the members of the SMSF once they have reached age 65 or retire. Assuming that you are a member of the SMSF and therefore a related party to the SMSF, it means that while you can buy a car, you can’t keep it at your address, lease it to yourself or use it.

Costs vary depending on whether an individual or corporate trustee structure applies. Total setup costs can range from $4,000 to $5,000, depending on the complexity and number of fund members. These will be highlighted along with any other upfront or ongoing fees as part of your consultation.

You need to create the SMSF trust and appoint trustees (individual or corporate). If you plan to borrow for property or shares, you will also need to set up a custodian trustee company (bare trust) to hold the loaned asset on behalf of the SMSF.

Once your SMSF is established, we’ll assist with loan approvals, investment strategies, and ongoing compliance. Talk to experts today to get the right SMSF lending advice.

A standard SMSF setup, including SMSF setup online, takes about 4–6 weeks, depending on documentation and approvals. It involves entity and trust establishment and ABN registration. It also entails opening the SMSF bank account and rolling over existing funds.

A corporate trustee provides greater asset protection, easier member changes, and increased compliance benefits for your SMSF.

The amount you can borrow depends on whether you are looking to purchase residential or commercial property. ● Standard SMSF residential investment loans typically offer up to 80% of the property value. ● If you’re looking to purchase commercial property, most lenders will allow you to borrow up to 75% for properties that are non-specialised.

Similar to personal home loans, lenders for SMSF loans will assess whether you can service the loan repayments prior to accepting your loan application. The property’s rental income will form part of your serviceability test. We can help you with strategies to increase your borrowing capacity.

SMSF Loan Experts will help you decide whether using an Offset facility should form part of your lending strategy. Offset Accounts can act as a type of savings account that helps to reduce your interest payments. It is linked to your loan account and can have the monthly mortgage repayments debited from it. The interest payable on your loan is calculated by subtracting the balance of your offset account from your loan balance — meaning you pay interest on a lower amount. In addition, an Offset Account can help keep cash available for future investments.

The commercial loan can cover expenses that include purchase of supplies to assist in setting up and establishing the business as well as any fit-out costs. This is obviously in addition to covering the cost of purchasing the commercial property that will become the business premises.

We’ll make the process as simple as possible, but you can help us by having copies of: • SMSF Trust Deed • Custodian Trust Deed • SMSF audited financial statements • SMSF bank statement • Rental Estimates We’ll discuss everything else you need to apply, such as the commercial loan amount, interest rate, loan fees and charges as well as terms and conditions.

Lenders will want to see the strength of your asset position before assessing your application. Generally, lenders favour SMSFs with an established and diversified investment portfolio (https://smsfloanexperts.com.au/guide-to-smsf-diversification/)to provide good security and minimise risk of lending.

The key differences between residential and commercial loans come down to the loan security. Residential securities are generally much easier to value than commercial securities. In addition, the residential property market is typically subject to less market volatility than the commercial property market, which means more risk for lenders. The interest rate for commercial loans is consequently higher than residential loans.

Loans for commercial properties generally carry more risk than residential property loans. Therefore the commercial loan lender or bank will try to offset this risk by reducing the amount you are eligible to borrow.

Typically, repayment of the loan is dependant on how successful the business is. The cash flow of the business is often considered by lenders, who may restrict the LVR of the commercial property loan. Your SMSF will need to demonstrate it’s ability to cover the commercial loan repayments, much like all other loan types.

Ultimately, the security asset will be determined by the lender. However, generally residential security or commercial security are acceptable property types for SMSF loans.

SMSF interest rates are generally a bit higher than residential mortgage interest rates. This is because of the complex nature of investing inside a superannuation fund.

The loan repayments should come from the SMSF's bank account. This bank account does not have to be through the SMSF loan lender.

If you're unsure of aspects regarding your financial situation, investment strategy or need tax advice, it's always a great idea to seek advice from trusted professionals. We have a range of contacts in our professional network and would be happy to put you in touch if needed.

An SMSF loan works similarly to a regular property investment loan. However, due to superannuation and taxation law, it needs to be structured differently. The property that's being purchased needs to be held in a separate trust known as a bare trust until the mortgage is repaid. This is so the lender does not have recourse against the funds other assets in case of default. Essentially, if the borrower defaults on an SMSF loan, the lender can repossess the property held in the bare trust, but cannot take any of the funds other assets.

The minimum and maximum loan amounts for SMSF's will vary across lenders, however, they generally range from $50,000 up to $1,000,000.

The minimum and maximum loan amounts for SMSF's will vary across lenders, however, they generally range from $50,000 up to $1,000,000.

So that your investment can achieve higher returns.

So that you can get on with saving for your retirement!

Some of the more complex paperwork requires legal advice and certain certificates must be witnessed by licenced financial advisors - both of which we can organise through our partnered firms.

We’ve had loans settled in less than 2 weeks.

Ensuring all details are accurate and compliant with the ATO’s strict SMSF regulations.

The paperwork required for SMSF is complex and time consuming. Our goal is to make this process as painless as possible.

Because we have our own credit license, we have access to some of the most competitive loans on the market.

We deal with over 17 SMSF lenders.

Based on your circumstances, financial needs and goals.

To ensure compliance and minimise costs.