Super Fund borrowings (SMSF) is a popular strategy used by people today to invest in residential or commercial property. Since the amendment to the law in September 2007 to allow super funds to borrow money in their fund and the subsequent amendments to those laws in 2010, it has further clarified the capacity of super funds to borrow to invest.
There are a whole range of lenders scrabbling to get on board and offer this product to potential clients – but there are only a handful who have really got a great product to offer to the client that is reasonably priced both in interest rates and fees. They all have different requirements involved with the purchase of a property via your super fund.
Purchasing either commercial or residential property in your super fund, there are strict guidelines required by lenders in completing this purchase and borrowing via your Super Fund and it is best to engage our services before you go shopping to ensure that you are able to complete the purchase in your super fund.
You can usually borrow up to 80% of the purchase price for a residential property in your super fund, but you will need to have the 20% deposit and the set up fees and government fees within your fund to allow you to complete the purchase. For commercial borrowings the maximum lending is usually 70% of the purchase price and the 30% deposit and additional fees and stamp duty will be required in your fund to complete the purchase.
The most ideal situation is purchasing the property you are operating your business from via your self-managed super fund in you are self employed, rather than paying rent to someone else, you can own the asset yourself in your retirement.
We work with Lawyers and Accountants to ensure this process is set up correctly, and extra time should be allowed to set up the entities and the super fund before going shopping for your property. You will need to engage a financial planner to obtain a statement of advice before you are able to borrow money in your super fund.
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