How can I buy a house using a SMSF?

Any general questions you might have in regards to loans and finance.
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Otto Dargan
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Re: How can I buy a house using a SMSF?

Post by Otto Dargan »

Hi magicarp. Welcome to the forum.

An Self-Managed Superannuation Fund (SMSF) is a special type of trust that people can set up to manage their own superannuation. And it may be possible for you to get a home loan with an SMSF.

Many people also use their SMSF to help plan for their retirement and assist with tax planning. Like a normal super fund, your employer contributions still get paid into the fund and you can make additional contributions as you see fit.

With an SMSF, you could borrow up to 80% of the property value. However, most lenders restrict SMSF loans up to 75% or 72% of the property value. You may need to pay up to 5% of the property value in additional costs such as stamp duties and conveyancing fees as well. You can try our SMSF borrowing power calculator to see how some of our banks would assess your situation.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

User avatar
Otto Dargan
Mortgage Specialist
Posts: 7730
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: How can I buy a house using a SMSF?

Post by Otto Dargan »

Hi magicarp,

Setting up an SMSF is a big decision requiring lots of thought and thorough research. You should assess the following considerations to determine whether it meets your needs or not:
  • Will it save you money? - There are various fees involved in managing an SMSF. Consider how much you actually have as retirement savings and whether it is financially sound to set up an SMSF.
  • What benefits will you lose? - You are likely to have many benefits and options included in an employer-provided super fund. However, to receive the same benefits under an SMSF, you would have to organise these yourself. The most common benefit is cheaper life insurance. However, you may find that many public super funds can transfer the insurance at the same rate into your own name.
  • Can you invest your super funds effectively? - When you are part of an employer-provided super fund, the money is managed and invested by professionals with specialised knowledge. Generally, SMSFs are best suited to those who have particular personal investment experience.
  • Losing funds - If you were to lose any money there would be no way to reclaim those funds. This is unlike the compensation available for other super funds.
  • Are you well informed and have the time to manage the SMSF? - You need to know about all the legislation, regulation and taxation requirements you are expected to meet. It is also important to have knowledge of the investment market.
There are several components involved in setting up a Self-Managed Super Fund. Every SMSF needs to be made in accordance with regulation and applicable legislation, such as Australian Taxation Office (ATO) reporting requirements among others.

To ensure that you are complying with all of the regulations, speak to a tax agent who can offer you specialist taxation and financial advice.
You can discuss your situation and loan needs with one of our mortgage brokers by calling us on 1300 889 743 or our free online assessment form.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

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