Whether your property investment plans involve purchasing property to lease out or have your business lease through your SMSF, you'll need the right lending framework to optimise tax incentives and power investment growth.
At SMSF Loan Experts, we provide the most effective lending solution to meet your financial goals. Holding our own credit license gives us access to some of the most competitive investment property loans available.
We’ll take away any confusion and ensure your investment isn’t limited by an insufficient lending strategy.
Borrowing for the purposes of commercial investment within your self managed super fund requires professional legal and financial guidance. Failing to obtain specialist services may seriously affect the success of your future investments. Regardless of your situation, we advise on the best structure for you to buy commercial property.
All of our experts are SMSF accredited with MFAA (Mortgage and Finance Association of Australia) to guide you through every step of the process. To ensure a fully comprehensive service, we leverage the knowledge of our closely affiliated specialist lawyers and broader professional network. We offer a tailored solution designed after taking your individual needs into account.
Understanding SMSF Commercial Loans
- Can be used to purchase traditional commercial properties such as factories, warehouses, shops, and offices or more specialised securities such as breweries
- Property can be leased to a related business
- Commercial loans can’t be used for construction
- The Loan-to-Value (LVR) rate and interest rate can vary significantly between lenders, typically 70%-80%
- Servicing can be met with rental income only or rental income plus contributions
- Consider any GST impact to your purchase when calculating available settlement funds
- Application costs (including legal fees) generally range between 1% and 1.5%
Frequently Asked Questions
What does the Commercial Loan cover?
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.
How is the SMSF Loan repaid?
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 loan. Your SMSF will need to demonstrate it’s ability to cover the commercial loan repayments, much like all other loan types.
Why is the LVR lower 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.
How does a commercial loan differ from a residential loan?
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.
What does my SMSF need before applying for a Commercial Loan?
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 to provide good security and minimise risk of lending.
What documents do I need to provide?
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 loan amount, interest rate, fees and charges as well as terms and conditions.