We have experience with getting clients a SMSF Loan and can provide you with critical questions you should be asking your accountant, planner and lawyer before spending any money. SMSF Loan are surrounded in legislation and lender rules and can go badly if not managed the right way. It is really important to note that managing it right is your responsibility, it is after all a SELF Managed Super Fund. Whilst you will pay people for advice along the way, you are the decision maker and it is wise to get as much information as possible.
Top tips for SMSF Borrowing are;
When starting out, talk to us first, we offer free information on the process and will educate you on how a SMSF Loan works.
It is really important to check your SMSF aspirations can actually occur before spending any money. This is even more important if a SMSF loan is involved. It would be a disaster to set up SMSF Trust Deeds only to discover you can’t get a SMSF loan to buy property, when this was your plan all along. We can provide an indicative idea of what can be achieved with different lenders before anything is actually changed.
SMSF trust deeds can be created by many different businesses, but in the end most banks will require that they be reviewed by an RG146 qualified person, we recommend getting them done by an RG146 qualified person in the first place to avoid paying twice.
Once deeds are established, your SMSF can open a bank account to roll funds from your existing super accounts. Rolling of funds can take a very long time as the fund manager loosing you, has no incentive to do it quickly and 8 weeks is not unusual. We recommend waiting until the funds have actually rolled over before making any offers on property. Our mortgage broker can however achieve a pre-approval at this stage, typically with the conditions being; that proof of funds roll over is provided and the property being purchased is acceptable to the bank (ie a valuation).
Before making an offer on property, find a conveyancer / solicitor that have experience in SMSF purchases. We know people who can help you here. Experience helps heaps as they will often need to educate the Real Estate agent and vendor’s solicitor on how things work. They will also understand and support us when we say that you should have a 30 day subject to finance and 60 day settlement period. Whilst things can often be quicker than this, removing the stress of a tight deadline is beneficial.
When the loan contracts eventually arrive, there will be pages that need to be signed by your RG146 qualified person and an independent lawyer/solicitor will need to brief you on what it means to be a guarantor to your own SMSF and sign off that this was done. Our mortgage broker will meet with you and help understand who needs to see what documents.
Overall you should be thinking about the following costs but confirm costs at the very beginning;
- Trust Deeds $2,000 (can include RG146 sign off)
- Conveyancer $1,500
- Bank application fees $2,000
- Separate RG146 if it’s for existing trust deed $1,500
- Lawyer sign off $550
- Misc (pest and building insp etc) $600
- Government fees for mortgage registration, land titles transfer and stamp duty.
- Davies Home Loans $Nil