SMSF LENDING STRATEGY
Our goal is to find the right SMSF lending strategy for you.
At SMSF Loan Experts, we take the time to understand your financial needs so that we can advise the most suitable lending strategy to meet your goals.
Every situation is different. You need flexible options that will provide the best investment returns. Our team understands the range of lending strategies available to you. These are just a few of them:
C2 Lending
C2 LENDING is one of the best-kept secrets in the industry. It’s a unique SMSF structure that:
- Gives you access to standard loans at much lower rates than the usual inflated superannuation loans.
- Saves legal and application costs.
- Provides access to a wider range of investment options.
- No Liquidity requirements.
Normally, an SMSF property must sit in a separate trust until the loan is repaid to comply with strict ATO legislation. This is often referred to as a Bare Trust or Custodian Trust and your SMSF is the sole beneficiary of that trust.
C2 Lending, however, allows the Trustee of the Bare/Custodian Trust to be the borrower as opposed to the Superannuation Fund itself.
There isn’t another lending solution like this in the marketplace.
Related Party Lending
Related Party Lending allows your SMSF to borrow money from any combination of sources when acquiring an asset. If you have enough cash or equity in properties, you could become the lender for your SMSF. Example: You borrow $400k against your home to lend to your SMSF. You make the required repayments to the bank and your SMSF forwards repayments to you.
The benefits of such a set up include:
- Avoiding expensive legal costs
- No limitations on what type of property investment you buy.
- Greater choice of lenders.
Things to consider:
- Losing access to the equity or cash which has been loaned to your SMSF.
- The maximum borrowing capacity for related party loans is 70% of the value of the property.
- There are restrictions recently added by the ATO.
This is a complicated loan product that is not suitable for everyone and getting the right advice is essential.
Hybrid Lending
Hybrid Lending occurs when your SMSF borrows some of the funds to purchase a property from a third party, such as a bank, and some of the funds from a related party, such as the funds trustees. In essence, it’s a mix between a traditional SMSF loan and a related party loan.It can be particularly effective to circumvent the GST hurdle for commercial purchases or to bridge a small deposit shortfall.
The set up of hybrid lending is more complicated due to:
- Coordination of the different parties involved.
- The requirement for a more advanced bare trust.
- Comprehensive loan documentation.
