Lending to SMSFs
At Blue Key Finance we know how important it is for you to understand the ins and outs of SMSF restrictions, costs, interest rates, product features, servicing requirement, and minimum documents required to support your application.
The Gearing Structure
- The SMSF Trustee must be permitted to borrow under the SMSF Trust Deed
- A seperate company entity is required to hold title to the property on trust for the SMSF
- A Trust arrangement deed is required (between the SMSF and the property custodian) specifying the roles and duties for future asset acquisitions byt the SMSF
- The vendor must be ab unrelated party if residential property is being purchased
- The SMSF has beneficial right to the property by maing one or more payments (title transfer available on full loan repayment)
- The SMSF must be able to service the loan from its own income sources
SMSF Restrictions
- Maximum LVR 70% for residential properties
- Maximum 30 year loan term
- Property purchase for investment only
- No construction or property development
- No purchase of vacant land
- No company title ownership structures
- No capitalisation of interest or funding of interest is permitted by the SIS Act
Costs
- Application fee
- Legal fee for perusal of Super Fund Trust Deed
- Legal fee for perusal of Security trust Deed (prepared by applicants solicitor)
- Legal fee for preparation of documents
Interest Rate
- Standard variable rate or standard fixed rates
- May have interest only for 5 years (no 2nd interest only term)
Product Features
- No redraw available
- No capitalisation / funding of loan interest
- No set-off / account combination
- No security swaps
- No limit increases
Servicing of Loan
- Require minimum 2 years tax returns and financials from the SMSF
- Contributions from members
- Proposed net rental income from the investment purchase
- Income from other investments held in the SMSF (less any assets redirected to property acquisition)
Minimum Documentation Required
- Application for business lending to be completed in name of the SMSF
- Guarantor particulars to be completed by all members / directors of the SMSF
- 2 years full tax returns and financials from the SMSF
- SMSF Trust Deed
- Security Trust Deed
- Contract of Sale
- Evidence of rental income for purchases
We strongly recommend that you receive the appropriate investment, tax and legal advice prior to implementing any strategy.
If you would like to discuss your lending requirements for your SMSF you can: