Responses
The banks have specific requirements for purchasing property in SMSF!
There needs to be a bare trust and trust for the purchase.
Happy to send through more details of the requirements is you would like?
Damian
Finance Broker
Hi Tony
Probably best to speak to your accountant (and financial planner if you have one) in the first instance regarding the best options for your situation. As Damian said, the banks have extra requirements when lending for a SMSF purchase and the cost of borrowing (interest rate, fees and charges) is higher than for individual customers.
Please don't hesitate to reach out if I can assist you further.
Amy Ferguson
Mortgage Specialist
How simply can I purchase property in a SMSF ?
My role is to help you realise your dream by providing all the information and credit guidance you need
Here are a few reasons you may want to recommend a knowledgeable financial planner or accountant to ensure the credibility of your most important purchase – inside a SMSF.
I have setout the steps to setup and implementation your SMSF strategy.
Step 1 - Statement of Advice ( If required *)
This will cover off your suitability for a SMSF with particular focus on funding and costs that are involved. It will cover the purchase of your property and the necessary structures you need in place to complete such a purchase and also the ongoing cash-flow of your fund. Address estate planning issues and also contingencies that need to be in place to account for such issues exclusively associated with SMSF property purchases.
Step 2 – Liase in the setup of your SMSF
We will liaise with your accountant or solicitor in the setup of the necessary structures needed for the purchase of a SMSF including
- SMSF Trust Deed - Working account - Insurance
- Bare trusts and; - Corporate Trustee
Step 3 – Assist with the loan application
Some lenders require either a SOA * or an advice certificate to be signed in order to implement a loan. The advice we provide will be able to meet these requirements with the Trust deed also being pre-approved for ASIC and ATO requirements.
Typical Setup Costs
SMSF Setup - $2500
Statement of Advice - $3500
Legals - $1500
Bare Trust and Corporate Trustee - $2200
Stamp Duty - included with borrowings
Other : Conveyancing, Insurance - tba
The Financial Planner can complete the whole set up for a cost of $7,500.
SMSF Lending
There is regulation and confusion about SMSF lending and how to borrow. Each lender has different policies, each borrower different goals and servicing ability.
This is a general introduction to SMSF lending “policy” :-
• Residential security still 80% lending - most are now 70%.
• Commercial security still at 70% lending - most 65%
• Off the Plan - single contact - now 60% max
• Brand new SMSF - ok for many
• Credit - some can have minor credit impairment
• Interest only 10 years - most 5 yrs
• Minimum sized fund - most $150k before purchase and range from 2.5% - 20% “other investments or cash” - to $300k
• Interest Rate and Fees vary widely
• Independent Financial Advice – not always required but recommended
An example of Policy from 2 lenders
#1 Lender
• 80% LVR lend
• from 5.69%œ
• 20% “other assets” required after settlement –
• cash or other investments (to show diversity)
• $30k min loan - Max $1.25M
• Term 30 years (resi)
• Application Fee $495 (includes 1 valuation and settlement costs)
• Setup New SMSF $695, Review Corporate Trustee $895
• Monthly $10
• Ability to review credit impaired
#2 Lender
• 70% LVR lend
• from 5.49%
• 2.5% “cash” required after settlement if off the plan else $0
• Max Loan $1M - Min tba
• Term 30 years (resi)
• Application Fee 0.75%
• Valuation $302.50, Title Insurance $130
• Legals $1600+
• Monthly $15
• Ability to review credit impaired
Happy to help with specifics