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How much can I borrow with an SMSF commercial loan?

Posted: Wed Aug 13, 2014 11:01 am
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?

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

Posted: Wed Aug 13, 2014 4:05 pm
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

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

Posted: Wed Aug 13, 2014 8:20 pm
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%?

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

Posted: Thu Aug 14, 2014 9:01 am
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

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

Posted: Thu Aug 14, 2014 3:42 pm
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.

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

Posted: Sat Nov 15, 2014 2:19 pm
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?

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

Posted: Mon Nov 17, 2014 11:56 am
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

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

Posted: Mon Nov 17, 2014 5:34 pm
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 :)