For anybody out there who may not be aware, what is known as a “Self-Managed Superannuation Fund,” (SMSF), is an annuity fund created by up to 4 people with the aim of offering benefits at retirement or upon an early death or disability.
- The capital is taken good care of by the Trustees, whom are all members.
Today, more Australians than ever are choosing to take full control and getting more involved in their personal superannuation.
Credentials for a SMSF Property Loan
- The main reason why many people today choose to take care of their own annuity is due to the adaptability offered in choosing where their money will go for investment.
- Laws regarding superannuation allows for SMSFs to obtain money to assist in buying residential investment property, which provides forthright exposure to real property services.
- Australian citizens with current SMSF loans or presently in the process of founding a SMSF.
- SMSF’s that already have a residential property loan and want to refinance from another lender.
- Should you have a SMSF facility set up already, it is now able to acquire funds to purchase a residential, retail, commercial, rural or specialised property through an SMFS loan facility.
Essentially, it must follow that:
- A Security Trustee will buy the property on behalf of the SMSF and then become the lawful owner of said property and maintain it in the trust for the SMSF (as beneficial owner).
- Specialist superannuation lawyers are your best bet for people without the experience in this field and can give you great peace of mind.
- The SMSF will provide an equity offering from the Superannuation Fund’s assets and obtain the balance of the money via an SMSF loan.
How does it function?
- The Lender provides the loan facility to the SMSF, to help with the purchasing or procurement of applicable income producing real property
- The resource is kept in a trust in which the SMSF holds a beneficial interest.
- Any finances, which have been borrowed (SMSF Loan) are then used for the purchase of an asset.
- The SMSF loan is a “limited recourse”, meaning that a lender cannot touch any other SMSF assets apart from property held as security, which basically means that the rights counter to the SMSF in the case of default, are only limited to the security property.
- Cash reserves to realise – the SMSF construct must have enough cash or equity, to fully cover the necessary deposit, acquisition and settlement costs.
We are all aware that home-ownership will indeed lead to a better life and is viewed as a means of success and security. And even though being a home owner is something which is enjoyed by a lot of Australians, the steady increase in housing costs when compared to the average salary is definitely making it harder for most good folk to have their very own home.
The buying of property by way of an SMSF will certainly help you get closer to that golden dream.