SMSF Loans In Westmeadows

Two different questions get asked here and they have different answers. An SMSF generally cannot lend money to a member or a related party of the fund, because that would breach the in-house asset and related-party rules under superannuation law. An SMSF can, however, borrow to buy an asset, provided the borrowing is structured as a limited recourse borrowing arrangement that meets the requirements of the SIS Act. In practice a member or related party can also lend to the fund under a related-party limited recourse arrangement, but it must be on arm's length commercial terms and the ATO publishes safe harbour terms for exactly this. All of that is territory for your accountant and adviser to confirm for your fund. Our role is arranging the borrowing once the structure is settled.

The panel has narrowed considerably, and this is the single most important practical point. Most of the major banks withdrew from SMSF residential lending some years ago, and the market is now served largely by second-tier lenders, non-bank lenders and specialist funders, with a handful of banks still active in SMSF commercial. That means SMSF rates and fees generally sit above standard residential lending, and it also means the lender you bank with personally is probably not an option for your fund. We will not name specific lenders here because appetite and policy in this space change frequently, and quoting a stale panel helps nobody. Call us and we will tell you who is currently writing the type of deal you have.

We cannot responsibly quote a figure here, because SMSF pricing moves and varies widely by lender, property type and loan-to-value ratio, and any number we published would be out of date and could mislead you. What we can tell you is the structural reality: SMSF lending is consistently priced above standard residential lending, because the lender's recourse is limited to the single asset and the market is served by fewer lenders. Commercial SMSF lending is generally priced above residential SMSF. When we present options you will get the actual rate, the comparison rate and the full conditions in writing from the lender, so you can compare properly rather than relying on an advertised figure.

More than a standard loan, and most of the cost is not ours. The bare or holding trust has to be established and the deed prepared, which is typically done by your accountant or solicitor and commonly runs $1,500 to $3,000, and if a corporate trustee is set up for the holding trust there are ASIC registration costs on top. Lender application and establishment fees on SMSF lending are generally higher than residential, often several hundred to a couple of thousand dollars, and most lenders require an independent legal advice certificate for the trustees, adding further legal cost. A valuation is required as usual, and commercial valuations are considerably dearer than residential. Your accountant's fees for the additional fund administration are ongoing. These are indicative figures set by third parties and we confirm them for your structure.

No, and it is important to be clear about that boundary. Loan Point Solutions provides credit assistance, which means arranging and structuring the loan. Whether your self-managed super fund should borrow, whether property suits your fund's investment strategy, the tax consequences, and whether the fund has adequate liquidity and insurance are all financial and taxation advice, which sits with your licensed financial adviser and your accountant. What we will do is work alongside them, tell them exactly what the lender requires, model what the borrowing costs and what the servicing looks like, and flag anything in the loan structure that would create a compliance problem. Any broker who tells you a super fund should buy property without holding the relevant licence is operating outside their authorisation.

Each limited recourse borrowing arrangement can only be used to acquire one single acquirable asset, and this trips people up more often than any other rule. A house on one title is one asset. Two adjoining titles are generally two assets and would need two separate arrangements, even if you think of them as one property. Off-the-plan apartments, subdividable blocks and properties spanning multiple titles all need care at contract stage. The related trap is the improvement rule: borrowed funds cannot be used to improve the asset in a way that changes its character. Repairing a roof is maintenance and generally fine; demolishing a house and building units is a change of character and is not permitted while the borrowing is in place. Get the contract checked before you sign, not after.