Refinancing your SMSF loan could save you thousands of dollars and could potentially add up to hundreds of thousands by the time you are ready to retire. We address the top concerns regarding SMSF loan refinance.
Eligibility Criteria to Refinance SMSF Loan
For SMSF loan providers to consider offering finance to SMSFs, the fund must meet certain eligibility criteria.
Existing Loan
When it comes to your current loan, lenders will want to see that it is more than one year old and the repayments have been made on time in at least the last six months. If your existing product is with La Trobe it’s possible it could have prohibitive exit costs which basically means you’re unable to refinance your SMSF loan for usually the first five years.
Property Details
Don’t worry if your property is not a flash office in a metro location; Most types of properties and locations are acceptable for refinancing. The decision is up to the SMSF lender, but generally speaking, if you have a current loan then you shouldn’t have an issue with refinancing based on the property location or type.
New Loan
When refinancing an SMSF loan, you are eligible for an amount that covers the existing loan balance as well as the refinance costs. It is not possible to release equity through refinancing.
The new loan cannot be any more or any less than the current amount and will have a term of 30 years with the option to go interest-only for up to five years.
To be eligible to refinance, the amount must be less than 80% of the property value for both commercial and residential.
Liquidity requirement
Lenders generally want an SMSF to hold around 10-20% of the property value in cash for liquidity purposes. For SMSF loan refinance, liquidity requirements can usually be waived or mitigated, and are not proving to be a barrier to refinancing your loan.
For any funds that are holding a significant amount in cash reserves, you may be interested to know that through refinancing, you can gain access to an offset account. With the cash rate at a record low, the rate of return on cash assets is next to nothing. With an offset account, you can use your cash reserves to reduce the amount of interest you pay on the debt.
Why Refinance SMSF Loan?
An SMSF loan refinance could be an effective way to save thousands and have more money to put toward your retirement. Refinancing also allows you to choose a product with better features such as an offset account to provide more flexibility and a favourable financial outcome.
SMSF Loans Interest Rates
SMSF loans interest rates are often a primary motivator for looking to refinance. Rates are low at the moment, so it’s a great time to reassess your situation to see if you could potentially save money — we’re willing to bet that you can probably save thousands!
The interest rates available depend on your loan to value ratio (LVR). The lower the LVR, the lower the risk to the lender, resulting in a lower rate for you. But a high LVR doesn’t mean you’ll be paying a high interest rate. The current economic climate means that all SMSF loan rates are really attractive at the moment — even for LVR’s up to 80%!
We can help you access products with great interest rates and fees that are lower than the industry standard. Some outstanding products currently available are:
- ➤ Residential purchases and refinances up to 60% LVR
- ➢ 4.69% p.a. variable rate
- ➢ 100% offset account
- ➢ Fees lower than the industry standard
- ➤ Residential purchases and refinances up to 80% LVR
- ➢ 5.2% p.a. variable rate
- ➤ Commercial purchases and refinances up to 45% LVR
- ➢ 4.4% p.a. variable rate
- ➤ Commercial purchases and refinances up to 60% LVR
- ➢ 5.09% p.a. variable rate
- ➢ 100% offset account
- ➤ Commercial and residential purchases and refinances up to 80% LVR
- ➢ Attractive interest rates
- ➢ Competitive fees
- ➢ 100% offset account
In some circumstances, it is possible for us to negotiate even lower rates than those listed above. Please get in touch to find out if you’re eligible.
How to Get Approved
As a start, ensuring you meet the eligibility requirements greatly improves your chance of being approved. Further to this, we offer a groundbreaking refinance service offering our expert knowledge that could save you thousands. We’re not called SMSF Loan Experts for nothing! SMSF borrowing can be complicated and confusing. We make the process stress-free and straightforward. Book in a time to chat with us, and we’ll make sure you’re getting the best deal available.
