An SMSF home loan differs from your typical home loan in terms of legal structure, purpose, lending policies, and loan structure.
If you’re looking for an SMSF home loan, our senior brokers at Mortgage Pros will get you on track—providing the right finance using your SMSF.
Do I Need an SMSF Home Loan?
SMSF home loans can be used to purchase property which can be used for residence or investment purposes. That includes residential properties, commercial assets, and even vacant land.
Legally speaking, the Superannuation Industry (Supervision) Act 1993 allows all super funds to take up a loan for property purchasing. But unlike typical home loans, the SMSF can only borrow money under limited exceptions, particularly a limited recourse borrowing arrangement (LRBA).
If a loan defaults under an LRBA, the lender’s recourse or action will be only limited to the property subject to the loan and cannot take other assets included in the SMSF.
How Much Can I Borrow under an SMSF home loan?
The amount you can apply for depends on your unique financial circumstances and the health of your super fund. Discuss your situation with us today and we’ll help you apply for:
- SMSF Property Investment Loans for up to 80% LVR
- SMSF Home loan discounts from a few lenders that are otherwise inaccessible with a typical home loan.
You may also apply for standard investment loan rates if we think your SMSF structure fits most lenders’ criteria. In most cases, SMSF home loan structure and policy vary across different lenders, especially when evaluating your borrowing power.
Speak with one of our mortgage brokers at 1300 030 388 and fill out our assessment form to know more about SMSF home loans.
Do SMSF home loans have restrictions?
Yes. Since SMSF home loans are specialised loans, restrictions can prevent the borrower from transacting, such as:
- Construction and Renovation loans are prohibited. You can use your SMSF to pay for renovation and construction. But you cannot use the borrowed money for it.
- Purchasing a residential property in which you will live under the SMSF is not allowed. This is mostly due to superannuation regulations in Australia and not because of lenders’ jurisdiction. But you may get approved for owner-occupied businesses or investment property.
We encourage seeking a professional mortgage broker to help you navigate SMSF home loans and fully understand their policies, benefits, and risks, as well as how each lender differs.
How Can I Get Approved?
Each bank/lender has varying criteria and ways to evaluate your SMSF home loan application. Our senior mortgage brokers will take you through limited recourse options under SMSF home loans and provide you with a range of solutions for you to choose from.
Bare Trusts and SMSF Home Loans
In most SMSF home loan arrangements, your bank/non-bank lender will lend to you or the SMSF trustee. However, the trustee has no legal ownership of the property in question.
For these cases, we have a few lenders in our panel who will accommodate bare trust and holding trust for applicants with strong proof of income. Talk to us today and we’ll let you know whether your trust qualifies for higher LVRs and competitive interest rates to maintain your borrowing.
When borrowing under SIS Act 1993 compliance requirements, the SMSF and trustee for the bare trust must agree. For this, we recommend seeking legal advice or speaking with your accountant.
Furthermore, your bare trust trustee must be a company director (or the company itself). That’s because lenders will refer to the director’s income or the company’s profit to evaluate the trust’s capacity to take up a loan.
If that’s too much to wrap around your head, feel free to call us at 1300 030 388, and our senior mortgage brokers will gladly take you through the process.
How a Mortgage Broker can Help
An SMSF loan is a very complex loan involving more time and parties than a personal loan. Without direct access to lenders and exclusive rates, partnering with a senior mortgage broker specialising in SMSF home loans is smart.
At Mortgage Pros, our senior mortgage brokers will help you prepare all the documents necessary to apply and assess your situation to maximise your chances of getting approved.
Besides, most lenders have withdrawn from the SMSF lending market since 2018. But while most banks have closed doors for SMSF loans, many non-bank lenders still provide these loans for qualified applicants.
When shopping for standard home loans, you should expect slight loan terms and rate variations among banks and lenders. But when comparing SMSF home loans, there’s a massive difference between fees and interest rates, so it’s best to compare it before jumping into a contract.
At Mortgage Pros, get mortgages for professionals, by professionals. We specialise in SMSF home loans and will offer options with the best features to give you a convenient and smooth experience.
Frequently Asked Questions
Can I apply for an SMSF home loan under my name?
To use your SMSF for a home loan, the property you’re buying and the SMSF loan must be under the trust’s name and not yours. However, SMSF trustees are responsible for managing the property.
You’ll also need your company director to establish a bare trust. Speak with our specialist mortgage brokers today to learn more about SMSF home loan signatories.
Why don’t banks accept SMSF Home Loan applicants?
The market size for SMSF home loans is significantly smaller than standard home loans. Add that to the sheer complexity of trust loans and limited recourse policies; it makes sense why most banks wouldn’t bother with SMSF loans.
There’s just more work and higher risk for a lower profit margin. However, not all lenders share the same stand. There are a few who accept SMSF loans at a discount!
Talk to us today and discover which lenders offer the best SMSF home loan rates and terms.
How long before I get approved?
Our previous SMSF home loan applicants often took a week to prepare and compile the documents necessary for application. Then, it takes us another week to submit it to lenders for assessment and getting pre-approval.
Since SMSF home loans are often larger and more complex than other standard loans, getting pre-approval may take longer and at tighter criteria.
That said, seeking an SMSF home loan two weeks before shopping for a property in your desired suburb is wise. Allocating extra time saves you from urgent adjustments and disappointment.
How do I get started?
Applying for an SMSF home loan involves careful planning between you, the trustee, and the trust fund. Note that more parties get involved—your lender, real estate broker, solicitors, and accountants.
If SMSF home loans’ sheer scale and complexity intimidate you, our senior brokers at Mortgage Pros can help lighten your thinking and legwork.
We’ll discuss your current financial situation, your super funds’ health, and the property market’s condition. Then we’ll take you through our curated options for the best SMSF home loans.
Get market-leading solutions so you can make informed decisions along the way. Contact us and start your SMSF journey with expert solutions at Mortgage Pros.
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