What is a SMSF Property Loan?
A SMSF property loan is a loan used to buy residential and commercial property from a self-managed super fund (SMSF). The returns on the investment – whether that’s rental income or capital gains – are channelled back into the super fund to increase your retirement savings. With the right SMSF loan, structure and property type, you can potentially save hundreds of dollars on account structure and keeping fees. With a SMSF loan, you also have the flexibility and freedom to:
- Plan your retirement on your own terms
- Choose an investment to suit your lifestyle & investment goals
- Get into property by borrowing within a Self-Managed Super Fund
At Your Advisor Group, our
finance brokers can help you understand, apply for and secure the most suitable SMSF property loan for your unique circumstances. Get in touch to get started.
Is a SMSF Property Loan Right For You?
Obtaining an SMSF loan can be a strategic move to amplify your investment capabilities, enabling enhanced asset diversification and potential for increased returns. The most common reasons people take out SMSF loans include:
- Asset diversification
- Property investment
- Portfolio expansion
- Capital preservation
- Tax benefits
- Income generation
- Retirement planning
- Leverage investment strategy
- Enhancing fund liquidity
- Securing commercial property
A SMSF Property Loan Case Study
Joan wanted a wealth building plan to help her set aside funds for a large nest egg for retirement. She had a SMSF with $200,000 and used the money to borrow extra funds to secure a residential investment property. Using a variable rate loan with a 7.80%p.a. interest rate, Joan borrowed $300,000 with an LVR of 80 per cent. The deposit is partly covered by some of Joan's SMSF funds, while the balance is borrowed money.
This allowed her to buy a property for $475,000, bringing the total cost, including stamp duty and other fees, to $500,000. Joan then rented the property out at $500 per week, giving her an annual rental stream of $26,000. Using money earned from the rent and other income, Joan was able to meet her home loan repayments and used SMSF money to cover repairs to the property.
Keeping an eye on market rates, Joan can increase the rent of her property while it grows in value over time. As a result, Joan can earn a steady stream of rental income and re-sell the property in the future potentially for a higher amount.
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The information provided on this site is on the understanding that it is for illustrative and discussion purposes only. Whilst all care and attention is taken in its preparation any party seeking to rely on its content or otherwise should make their own enquiries and research to ensure its relevance to your specific personal and business requirements and circumstances. Terms, conditions, fees and charges may apply. Normal lending criteria apply. Rates subject to change. Approved applicants only.
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