Got knocked back for a Macquarie Bank SMSF loan

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Steve
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Joined: Fri Jul 05, 2019 3:55 pm

Got knocked back for a Macquarie Bank SMSF loan

Postby Steve » Fri Jul 05, 2019 3:56 pm

Hi, we spoke with our advisors and set up a self-managed superannuation fund (SMSF). My wife and I are both trustees of the fund. We’re looking at using our SMSF to invest in property. We were very surprised when our bank Macquarie told us that they’ve pulled out of SMSF lending entirely. We’ve found a property that we’re really keen on and have already allotted a 25% deposit for this purpose.
Why are lenders pulling out of this space?
Are there lenders that can lend to an SMSF?

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Otto Dargan
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Re: Got knocked back for a Macquarie Bank SMSF loan

Postby Otto Dargan » Fri Jul 05, 2019 4:22 pm

Hello Steve. Welcome to the forums.

That’s absolutely right, most major banks have already pulled out SMSF lending with Macquarie bank the last of the majors to exit. However, there are still specialist or non-conforming lenders that are still offering SMSF loans with competitive interest rates. And that’s who we’re working with.

The reason major banks pulled out of SMSF lending is that firstly, SMSF loans are seen as a high reputational risk to some banks in the event that you were to default on your mortgage. These banks want to avoid negative publicity, particularly after a handful of case studies were used as examples in the recent Royal Commission into the banking and financial services industry. Basically, some borrowers were recommended the wrong products and didn’t seek adequate financial advice before purchasing a property for their SMSF.

Also, a lot of people that have a self-managed superannuation fund are not necessarily high net worth individuals, which again relates back to potential negative publicity.

Finally, the reason for lenders pulling out of SMSF lending has to do with the complexity of meeting the regulatory requirements - the return on investment is not worth the risk with some lenders because again, they don’t tend to be large loans.

We specialise in SMSF loans.

Give us a call on 1300 889 743 or fill in our free assessment form to find out if you qualify for a SMSF loan.

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

Steve
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Joined: Fri Jul 05, 2019 3:55 pm

Re: Got knocked back for a Macquarie Bank SMSF loan

Postby Steve » Fri Jul 05, 2019 4:50 pm

I’ve heard that lending criteria have become significantly harder specifically borrowing power assessment. So, how do the lenders calculate SMSF borrowing power? Do they use the smsf income from the latest year’s trust tax returns? How much of the rental income can be considered for servicing?

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Otto Dargan
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Re: Got knocked back for a Macquarie Bank SMSF loan

Postby Otto Dargan » Fri Jul 05, 2019 5:08 pm

Hi Steve,

Typically, banks use income evidenced through the trust’s last two year’s tax returns and will then assess if that income plus the proposed rental income is sufficient to service the debt.

Lenders only use 80% of the rental income to allow for property repairs, maintenance and management fees.

Some lenders can also use the income of members or beneficiaries of the SMSF to support the application if a personal guarantee is provided.

To find out how banks will assess your situation, you can use our SMSF borrowing power calculator.

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

Steve
Posts: 3
Joined: Fri Jul 05, 2019 3:55 pm

Re: Got knocked back for a Macquarie Bank SMSF loan

Postby Steve » Fri Jul 05, 2019 6:52 pm

Both my wife and I are the trustees and beneficiaries of our combined SMSF. I’ve heard that SMSF lenders prefer a corporate trustee, is that so?

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Otto Dargan
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Re: Got knocked back for a Macquarie Bank SMSF loan

Postby Otto Dargan » Fri Jul 05, 2019 7:07 pm

Hi Steve,

Some of the SMSF lenders on our panel of almost 40 lenders accept both individual and corporate trustees. However, it’s true that some lenders only lend to SMSFs with a corporate trustee. The key is to apply with the right lender.

Give us a call on 1300 889 743 or fill in our free assessment form to find out if you qualify for an SMSF loan.

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


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