For further detail regarding borrowing through your SMSF contact What If We Finance, your Melbourne Mortgage Broker today.
Lending conditions are tighter and the maximum loan-to-value ratio available is generally lower; some lenders offering up to 85 per cent on residential property for full documentation and 83 per cent for low documentation loans. There may also be restrictions on the postcodes in which the property can be located.
The purchase of the real estate investment takes place in the usual way; the investor selects the desired property and then their SMSF must satisfy the loan requirements as specified by the super-leveraged loan provider.
A SMSF will be the beneficial owner of the property and is able to purchase any kind of real estate. This includes residential, commercial or even holiday homes, provides you purchase it as an investment.
The SMSF must have the right to acquire legal ownership of the asset by making at least one payment and any recourse by the lender of the funds used to purchase the Investment Property against the SMSF must be limited to the asset (or property) in question.
The SIS Act requires that the borrower’s funds are to be used to purchase an asset/real estate, and that the asset is to be held in trust for the self-managed fund by another entity; which would be the property trustee.
Legal requirements regarding SMSFs borrowing to purchase Investment Property are set out in the Superannuation Industry (Supervision) Act 1993 (SIS Act) under Section 67.
SELF-MANAGED SUPERANNUATION FUNDS (SMSFs) continue to grow in popularity. Melbourne Mortgage Broker What If We Finance believes this popularity is being driven by the ability of SMSFs ability to borrow to purchase investment properties. While this is option is possible borrowing to buy property through your SMSF is not straight forward and you need to work with your Mortgage Broker and Financial Advisor to ensure you comply with all bank and legal requirements.
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