Benefits of SMSF Loans
Superannuation can be frustrating, especially when you have the capital in your retirement fund but cannot use it to get access to funding for a new property investment. This is where we can help. Since 2007, people with self-managed super funds (SMSF) have an alternative – legislation changes enable fund managers to borrow money against their SMSF for financing purposes.
To acquire SMSF Loans, a nominated security trustee must make the purchase of the property and take ownership of its legal title, and an SMSF asset used as security. However, the lender only has a right to pursue equity should the terms of the loan be breached, all other assets are off limits. This extra level of security makes SMSF Loans an attractive option for acquiring financing for your next property investment.
To learn more about SMSF Loans and how an SMSF Loan can help with your next property investment, get in touch with our team today.
How do SMSF Loans work?
As long as the superannuation fund is identified as SMSF, the fund manager has an option to borrow money against it, provided that the funds are used for the purchase of a property of demonstrable value. A nominated security trustee makes the purchase of the property and takes ownership of its legal title. This purchase is made on behalf of the SMSF and is tied to this fund.
To acquire the SMSF Loans and to make the investment purchase, an SMSF asset must be used as security. However, the legal amendment of 2007 protects the fund, ensuring that the lender only has a right to pursue equity should the terms of the loan be breached.
All other assets and funds contained in the SMSF are off limits to the lender. This extra level of security makes SMSF Loans attractive options for acquiring financing.
Terms and conditions of SMSF Loans
SMSF Loans can only be used for the initial property purchase. For example, refurbishment fees must be alternatively funded. Also, any residential properties purchased using the SMSF Loans cannot be occupied by the fund manager, or by anyone named as a trustee until the individual has retired.
To learn more about SMSF Loans and to discover how an SMSF Loan can assist you with your next investment, get in touch with our expert team.