How much can I borrow with an SMSF commercial loan?

Share your concerns & ideas about commercial property loans in Australia.
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Robert
Posts: 60
Joined: Wed Jul 03, 2013 2:29 pm

How much can I borrow with an SMSF commercial loan?

Post by Robert »

Hi everyone,

I’ve been thinking about purchasing a commercial property for quite a while. With the recommendation of a friend, I’ve got my eyes set on one in Alice Springs. It’s going to cost me quite a bit so I’m planning on getting a home loan for it.

My uncle tells me that I may be able to borrow with my SMSF. I have no idea about how much I can borrow this way. Can anyone help me understand this as well as what I need to provide to get the loan approved?

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Otto Dargan
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Re: How much can I borrow with an SMSF commercial loan?

Post by Otto Dargan »

Hello Robert and welcome to the forums.

Not many lenders may be willing to lend to an SMSF to buy commercial real estate. However, the ones who do lend may allow you to borrow up to:
  • 70% of the value of a commercial property.
  • 80% of the value of a residential property.
  • $10 million. If you want to borrow more then your application will be assessed on a case by case basis.
If you take out such a loan then you may have a loan term of only up to 15 years because they are commercial security properties. Interest only repayments will also be reduced to five years, and 15 years for residential properties.

Here is a list of the documents that most lenders tend to require:
  • The SMSF trust deed.
  • A Custodian trust deed.
  • Tax returns for the SMSF. However, there are some exceptions to this.
  • Evidence of your rental income.
  • A full copy of the contract of sale.
Cheers,
Otto
Otto Dargan
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P | 1300 889 743
Home Loan Experts

Robert
Posts: 60
Joined: Wed Jul 03, 2013 2:29 pm

Re: How much can I borrow with an SMSF commercial loan?

Post by Robert »

That doesn’t sound too bad I suppose, although I would prefer to borrow a bit more than 80% of the property value… Is there any way that I can get to borrow 100%?

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Otto Dargan
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Re: How much can I borrow with an SMSF commercial loan?

Post by Otto Dargan »

Hi Robert,

Currently, the only way to borrow 100% is through a guarantor home loan. With this type of loan, you may be able to borrow up to 105% of the value of your investment property. This suggests that you would not even require a deposit.

To clarify, a guarantor is someone who is willing to guarantee your home loan by securing a portion of their own property. Although most lenders may only accept parents as guarantors, some lenders may even accept immediate family members like siblings, grandparents, or even adult children.

You can learn more about all of this by having a look at our website. If you want to discuss things directly with one of our brokers then you can give us a call on 1300 889 743. You can also fill in our free assessment form to see if you qualify for a loan.

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

Robert
Posts: 60
Joined: Wed Jul 03, 2013 2:29 pm

Re: How much can I borrow with an SMSF commercial loan?

Post by Robert »

Thanks a lot for helping me out. I’ll have a look at your website for now and will give you guys a call later in the coming days. I’m hoping that you guys will be able to help me get through all of this without much hassle. Talk to you soon. Bye.

Bukowski86
Posts: 49
Joined: Thu Jun 27, 2013 5:04 pm

Re: How much can I borrow with an SMSF commercial loan?

Post by Bukowski86 »

Hello,

A good friend of mine suggested me to make use of this forum, which is why I’m here. I was looking through a few threads and this one interested me a lot. I learnt quite a bit about SMSF commercial loans from this, but I’m more interested about learning the interest rates for commercially secured loans.

Can anyone list out some of these rates?

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Otto Dargan
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Re: How much can I borrow with an SMSF commercial loan?

Post by Otto Dargan »

Hi Bukowski86,

You may find difficulty in comparing and deducing the best commercial interest rates on offer because lenders do not publish them. However, below is a list of some of these rates.

For commercially secured loans, you may be able to get an interest rate of:
  • 5.28% on a variable rate loan.
  • 4.58% on a 1-year fixed rate loan.
  • 4.54% on a 2-year fixed rate loan.
  • 4.39% on a 3-year fixed rate loan.
  • 4.82% on a 5-year fixed rate loan.
If you take out an SMSF commercial loan then you may be able to get an interest rate of:
  • 5.55% on a variable rate loan.
  • 4.82% on a 1-year fixed rate loan.
  • 4.69% on a 2-year fixed rate loan.
  • 4.54% on a 3-year fixed rate loan.
  • 4.97% on a 5-year fixed rate loan.
You can visit our website or give us a call if you want to learn more.

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

Bukowski86
Posts: 49
Joined: Thu Jun 27, 2013 5:04 pm

Re: How much can I borrow with an SMSF commercial loan?

Post by Bukowski86 »

Wow, thanks a lot! I didn’t think you’d reply so fast and with so much info. I searched for a long time and all I found were outdated rates. I had a look at your website and it looks great. I’ll give you a call by the end of this week to discuss my situation and loan needs :)

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