Which banks still lend for an investment property with SMSF? NAB?

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Raul B
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Which banks still lend for an investment property with SMSF? NAB?

Postby Raul B » Tue Apr 16, 2019 4:26 pm

Hi, I have a diversified SMSF with investments in overseas shares (Nasdaq), fixed-term deposits, and managed funds. I’ve been meaning to further diversify my SMSF with a residential property, and use the least yield fixed term deposit (2.10% p.a.matured) to purchase the property. The fixed deposit payout is $58,400. I’m aware that lots of major lenders have pulled out of SMSF lending, not quite sure why. Nevertheless, I’m looking to purchase a $650,000 residential investment property in downtown Sydney and need a loan of $480,000 to $520,000 through my SMSF. Which banks still lend for an investment property with SMSF? And how do I qualify one?

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Otto Dargan
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Re: Which banks still lend for an investment property with SMSF? NAB?

Postby Otto Dargan » Tue Apr 16, 2019 6:49 pm

Hello Raul. Welcome to the forums.

That’s right, a lot of major lenders like CBA, WBC, ANZ, St George, BankWest, Macquarie, and others stopped offering SMSF loans because of the smaller size of the market, the complexity of trust loans, and because the lender's recourse is limited to the asset itself.

Technically, NAB still offers SMSF loans but they have such stringent requirements and conditions that less than 1% of the population will qualify for it. So, in reality, they don’t do it. However, there are a few select lenders that still offer SMSF loans for residential and commercial investment properties.

Different lenders have different qualifying requirements you need to meet for an SMSF investment loan, generally speaking:
  • The maximum LVR you can borrow for a residential investment loan is up to 70%-80% of the property value.
  • You’d need 20-25% of the property value as a deposit plus an extra 5% to cover the costs of completing the purchase.
  • As a minimum, your SMSF’s net worth must be over $150,000.
  • Some lenders prefer the trustee to be a corporate entity, while others are okay with an individual (both are accepted by some).
  • The security will have postcode restrictions. Metro locations are preferred, non-metro considered on a case by case basis.
  • Lenders want to see between 10% and 20% of the property value in cash within your SMSF account as an SMSF loan liquidity requirement also known as post-settlement liquidity requirement.
  • Other standard mortgage lending criteria apply.
Speak with one of our specialist mortgage brokers by giving us a call on 1300 889 743 or by filling in our free assessment form to find out if you qualify for an SMSF residential investment loan.
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Raul B
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Joined: Tue Apr 16, 2019 4:23 pm

Re: Which banks still lend for an investment property with SMSF? NAB?

Postby Raul B » Tue Apr 16, 2019 7:36 pm

That’s great, this could work. My personal gross income last year was $110,000. My annual taxable income from the trust last year was $42,000 (21k + additional contribution), with this year’s annualised income projected to be slightly higher at $58,000 including additional contribution to my super of $30,000. Is my SMSF income sufficient to service the loan of $500k? How is it calculated? Does dividend income count, if so, what percentage point do lenders take into consideration?

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Otto Dargan
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Re: Which banks still lend for an investment property with SMSF? NAB?

Postby Otto Dargan » Tue Apr 16, 2019 7:47 pm

Hi Raul,

With a quick calculation using our SMSF borrowing power calculator, you could borrow up to $522,230 by choosing the right lender. Your superannuation contributions are quite large and may incur penalty taxes. Our calculator does not take these higher taxes into account. However, we can complete a manual assessment for you.

The banks will assess your SMSF borrowing power using:
  • Employer superannuation contributions.
  • Additional voluntary contributions.
  • Rent income from the new investment property(appraised).
  • SMSF dividend income (conditions apply).
  • SMSF interest income (conditions apply).

Some lenders will typically only use 80% of the income from your SMSF when assessing your borrowing power, whereas, others will use 100% of your income.

All lenders will only assess 80% of your rental income to allow for expenses such as management fees and repairs. Dividend and interest incomes are assessed fully provided the shares/managed funds are not liquidated to cover the SMSF deposit.

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

Raul B
Posts: 3
Joined: Tue Apr 16, 2019 4:23 pm

Re: Which banks still lend for an investment property with SMSF? NAB?

Postby Raul B » Tue Apr 16, 2019 10:33 pm

What’s the best SMSF home loan rate I can get? I don’t want to get stuck paying commercial loan rates when it’s a residential property.

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Otto Dargan
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Re: Which banks still lend for an investment property with SMSF? NAB?

Postby Otto Dargan » Wed Apr 17, 2019 11:33 am

Hi Raul,

Exactly, the interest rates on SMSF loans vary vastly between lenders especially, considering the fact that with some banks you have to pay commercial business interest rates just because they will only assess your application through their commercial credit department.

With other lenders, particularly non-banks, you may qualify for an interest rate that’s closer to a standard home loan interest rate.

You can refer to our SMSF loan interest rates page for variable SMSF loan interest rates, 3 years fixed SMSF interest rates and 5 years fixed SMSF interest rates.

Give us a call on 1300 889 743 or fill in our free assessment form to find out if you qualify for an SMSF investment loan with the most competitive interest rates.

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


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