Loans for Self Managed Super Funds (SMSF)

There are significant advantages to having a property in an Self Managed Super Fund (SMSF) with the most obvious being the tax rate for income derived in your super fund being taxed at a considerably lower rate than income tax (namely 15%) as well as the choice to control your investments and your future investment strategy.

SMSF’s are able to borrow funds via what  has been defined by Superannuation legislation as a “Limited Recourse Borrowing Arrangement “(LRBA) which describes a loan/arrangement which has a limited recourse for the lender against the borrower in the event of default, to the single asset purchased using the specific LRBA  – thus protecting the other assets that sit inside the SMSF.

Each asset purchased using an LRBA must be housed inside what is known as a “Bare Trust”

Residential Property Loans

At Connolly Finance, we have access to a range of home loan products – whether you are a first home buyer, upsizing or downsizing, looking to invest, or simply wanting to refinance, we can help find a loan to suit your needs.

Mortgage loans can vary considerably, such as the size of the loan, maturity of the loan, interest rate and method of paying off the loan, so it’s always a good idea to speak with a mortgage broking professional to determine the loan that is right for you. We have access to over 25 lenders which means that we can help find the most appropriate loan, with the right features for your particular needs

To see how we can help, give us a call on 03 9591 8000 today!

Limited recourse borrowing arrangements that could include loans such as:

  • Basic Variable Rate Home Loan
  • Fixed Rate Home Loan
  • Offset Loan
  • Standard Variable Rate Home Loan

Investing in property within your SMSF isn’t for everyone (it may limit for instance the asset class weights inside the fund and thus create unnecessary risk – in other words, illiquid assets such as property may not be appropriate for your risk profile but, if you want to review the opportunity then the following key issues need to be considered:

  1. Does borrowing fit with your investment strategy?
  2. Does your trust deed even permit borrowing?
  3. Is the asset class (eg property) allowed in your SMSF via the trust deed?
  4. What expenditure is allowed?
  5. Bare trust deed requirements
  6. Borrowing to buy a commercial property
  7. Borrowing to buy residential property
  8. Limitations
  9. Costs of establishing an SMSF
  10. Seek financial advice.

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