SMSF Loans

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Buying A Property Using Your SMSF

A Self Managed Superannuation Fund (“SMSF”) is effectively a privately controlled superannuation fund. The SMSF can have no more than six members, who must be trustees of the fund, or directors if there is a corporate trustee. The members are in charge of the investment decisions, as opposed to a ‘professional fund’ manager which is the case in many of the traditional “Industry Funds”. 

SMSF’s have been able to borrow under strictly controlled conditions for more than 10-years. At the outset, the major banks and many other lenders were actively involved in the SMSF loan space, but around 2018, the majority of the major banks exited the market, saying that they wanted to simplify their loan books.

The withdrawal of the major banks created the (incorrect) perception that there are no SMSF loan options available; however this could not be further from the truth. Today there are a number of niche lenders who are actively competing for business.

Borrowing within an SMSF is definitely not for everyone and it is very important that you seek the right advice before proceeding. You should speak to your accountant, financial planner, lawyer and of course your broker because if you get it wrong, the consequences can be serious.

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    Parties to the Loan

    The SMSF is the borrower and beneficial owner of the property (refer to the following comments about the Bare Trust). The loan documents will be issued in the name of the SMSF, and the SMSF will be responsible for making loan repayments. 

    Many lenders require that an SMSF must have a Corporate Trustee rather than Individual Trustees, as it gives greater protection to both the lender and the members of the SMSF.

    The Bare Trust is the legal owner of the property, and holds the property for the benefit of the SMSF. The Bare Trust is therefore the legal purchaser of the property and its details are included on the contract of sale. 

    It is the Bare Trust that sets up the “Limited Recourse” nature of the loan, as it cannot hold any other assets except for the property. This is what makes the trust “bare” and it must transfer the property to the SMSF once the loan has been repaid

    The Bare Trust can also be called the Property Custodian or Security Custodian.

    These are the ultimate beneficiaries (‘owners’) of the SMSF. For an LRBA, the members of the fund must be the same as the directors of the Corporate Trustee of the SMSF.

    Lenders will also insist that the members provide personal guarantees to the loan. This means that they are effectively risking their assets outside of super, therefore providing  another layer of protection for the bank. This means that the lender only has limited recourse to the assets of the SMSF, they can pursue the assets of the members personally should something go wrong with the loan. To protect their interests, lenders will often insist that the guarantors obtain legal and financial advice before signing the loan documents.

    We have done many loans to help our clients purchase assets in their SMSF and also to refinance existing SMSF loans.

    Please note this is a high level overview only and we are only concentrating on the borrowing aspects.  As previously mentioned, It is important to seek advice directly from your financial and legal advisers before setting up these structures.

    SMSF Loans

    An SMSF loan is known as a Limited Recourse Borrowing Arrangement or LRBA.

    The security for the loan (the ‘recourse’) is limited to the property itself, and the assets in the remainder of the super fund are not available if anything goes wrong with the loan.

    Lenders will typically take personal guarantees from the members.

    Why Choose Proteger Financial Solutions?

    Navigating the purchase of a  home can be overwhelming, even if you have done it a number of times and that’s where Proteger Financial Solutions comes in. Here’s why partnering with us can make your journey smoother:

    Our team of seasoned finance professionals has in-depth knowledge of the Australian property market and is well-versed in the intricacies of various government schemes and grants. We can also guide you on the process of making an offer.

    Often the most daunting aspect of buying a property is understanding exactly what you can afford. Also, real estate agents will want to be assured that you are pre-qualified for the purchase. We can give you (and your agent) comfort via a pre-approval or confirmation of loan eligibility.

    We understand that every individual’s financial situation is unique. We take the time to understand your goals and tailor financial solutions that align with your needs and aspirations.

    As an independent finance broker, we have access to a wide network of lenders. Our wide network also  allows us to shop around and find the best mortgage deal that suits your financial circumstances.

    Navigating the paperwork and financial details involved in buying your first home can be time-consuming. Our team ensures a streamlined process, guiding you from application to settlement.

    Don’t navigate the complex world of home buying alone. With Proteger Financial Solutions you can enjoy a seamless experience that puts you on the path to homeownership. Contact us today, and let’s turn your dream of owning a home in Australia into a reality!

    We offer a great range of home loan solutions.

    shailesh V
    shailesh V
    28. November, 2023
    Alf and team have been very easy to deal with. They are knowledgeable with providing their services as well as guidance on what needed to be done next… we could have not asked for any better after we found Proteger Financial Solutions. Alf and team made sure we got the best rates in this ever-rising interest rate market. We can only praise their performance and the continued communication even on their time off while we had tight deadlines. They definitely know what they are doing and I would not hesitate recommending them to anyone. Thank you very much Proteger!
    rasik pindoria
    rasik pindoria
    4. November, 2023
    Great work by Alf and team. Proactive, knows the timeframes and deadlines to meet. Despite other unprecedented challenges we had that kept pushing finance further, Alf guided us through the journey. Alf recommended and advised us on the best options available in the market. Flexible to meet client pre/post work hours. Highly recommended.
    Brett Thompson
    Brett Thompson
    1. November, 2023
    Alf Kandiah, from Proteger Financial Solutions, conducted a full review of our corporate finance facilities in order to secure better facilities and terms for our business. I was super impressed with Alf's network of contacts within the banking sector, which made it possible to deal with the right people and get better terms and rates than I would've expected. Alf was relentless in squeezing the banks for the very best terms, so much so that he exceeded our expectations when it came to interest rates on our borrowings. Alf was very easy to deal with and always responded very quickly. I cannot recommend Alf and Proteger highly enough.
    Anu Kadurugamuwa
    Anu Kadurugamuwa
    6. October, 2023
    Proteger Financial Solutions helped us purchase our home. Throughout the process, they were professional, engaged and committed to delivering the best solution to fit our needs. Niranjan, who handled our application, went above and beyond to guide us through the process, and his expertise, approachability and professionalism made things stress-free. Our thanks to Niranjan and the team!
    Suneel Vaghjiani
    Suneel Vaghjiani
    7. August, 2023
    Helpful advise from the team(Alf). Great communication and assisted through settlement. Highly recommend Proteger Financial Solutions to family and friends.
    Ashlei Otway
    Ashlei Otway
    22. June, 2023
    Right when I had given up on getting into a home that was right for us, Rob was recommended to us and then the perfect property fell into our lap. It wasn't an easy process from beginning to end but Rob and his team took away the stress and worked through every road block we encountered with incredible patience and efficiency. I would not hesitate to recommend Rob and the team to help you with all your finance needs. Thank you very much once again, we will be forever grateful. Matt & Ash
    Korri Edwards
    Korri Edwards
    21. June, 2023
    Polite and efficient, and able to overcome the hurdles that presented themselves at settlement. Thanks Rob:-)
    Justin Ward-Dickson
    Justin Ward-Dickson
    19. June, 2023
    Alf made a daunting task an easy and pleasant experience. He took out all the stress normally associated with obtaining finance and walked us through every step, in fact he did most of the work for us. I have no hesitation recommending Proteger for all of your finance needs .
    Bhavesh Panchani
    Bhavesh Panchani
    8. June, 2023
    Excellent and very professional service by the Proteger Financial Team. Alf Kadaai was brilliant and did an outstanding job with recommending options, following up on my documents and advicing me to choose the best solutions at every stage of purchasing in such a difficult time in the market at the moment. I would like to Thank you and your team for the wonderful professional service you have provided!🙏🙏
    Chris Williams
    Chris Williams
    7. May, 2023
    I recently had Niranjan Kandiah assist with some bridging finance for my downsizing grandparents. I could not have asked for better service. Niranjan promptly found a suitable lender and was willing to put himself out to ensure that a loan with some unorthodox features was arranged and settled within a tight timeframe. I would readily recommend to anyone needing assistance in this space.
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