Firstmac’s self-managed super fund (SMSF) residential loans offer a competitive solution for customers looking to refinance or to purchase a new residential investment property within an SMSF.
SMSF popularity has grown in popularity in recent times given the strength of the superannuation market, with super now considered to be the largest asset in many households other than the family home. Chief Financial Officer at Firstmac James Austin said SMSF investment through residential real estate continues to go from strength to strength.
"Investment of superannuation funds into residential real estate is increasingly popular given the relative stability of housing prices, and the tax advantages associated with superannuation," Mr Austin told Savings.com.au.
Read more: How to set up a SMSF
What residential SMSF loans does Firstmac offer?
Firstmac offers the following Residential SMSF Loans:
| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | LVR | Lump Sum Repayment | Additional Repayments | Split Loan Option | Tags | Features | Link | Compare |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
7.24% p.a. | 7.25% p.a. | $2,726 | Principal & Interest | Variable | $0 | $0 | 70% | |||||||||||
7.74% p.a. | 7.75% p.a. | $2,863 | Principal & Interest | Variable | $0 | $0 | 80% |
How does a Firstmac residential SMSF loan work?
Firstmac’s residential SMSF loan offerings are in essence a home loan utilised by a SMSF to purchase a residential investment property. The returns of the investment, specifically rental income or capital gains on the value of the property, are then retained within the super fund to boost your retirement savings.
Firstmac residential SMSF loans are eligible for the purchase of a standard residential investment house, unit or townhouse however are ineligible for the purchase of vacant land or multiple dwellings on one title.
It’s important to note when it comes to SMSF lending there are several restrictions including:
- A trustee or anyone related to the trustee, cannot live in a residential property that you have purchased through the SMSF.
- A trustee or anyone related to the trustee, cannot rent the property purchased through the SMSF.
- The SMSF cannot buy a property owned by a trustee or anyone related to the trustee.
- The purchase must meet the ‘sole purpose test’ of solely providing retirement benefits to fund members.
The main difference between an SMSF loan and a regular home loan is the recourse. SMSF loans are what’s called a ‘limited recourse borrowing arrangement’ or LRBA for short. With an LRBA, the lender is limited in recourse, which means if the borrower defaults on the loan, the lender can only go after the asset the mortgage is secured against. They can’t go after other assets held in the SMSF, and is why interest rates are typically higher on SMSF loans than regular home loans.
Read more: A guide to buying a property through an SMSF in Australia
SMSF Loan features
Firstmac Residential SMSF loans feature:
- Liquidity benchmark of 5%.
- Minimum loan amount of $50,000 across all products.
- Maximum of $1,000,000 for SMSF 80 and $1,500,000 for SMSF 70.
- Maximum loan term of 30 years.
- Maximum loan-to-value ratio of 80%.
- Five-year fixed or variable rate options.
- Online access 24/7.
SMSF Loan fees
Firstmac Residential SMSF loans offer no application fees, no settlement fees, and no legal fees for a refinance. There are however some fees that come with the SMSF loan including:
- Valuation fee - $220 or at cost.
- Lenders legal fee - $490 for new purchase.
- Discharge fee - $300.
Eligibility Criteria
Firstmac Residential SMSF loans require the following criteria to be met:
- Borrow between 70-80% of the property’s value.
- The property will need to meet the SMSF loan criteria such as the purchase of a standard residential house, unit or townhouse.
- 5% liquidity benchmark post-settlement.
- All serviceability must be through the SMSF.
- Loans to be supported by personal guarantee/s from the beneficiaries of the SMSF.
Supporting Documents
All applications require:
- Signed loan application form with submission notes.
- SMSF serviceability calculator.
- Recent super fund statement/s evidencing contributions, cash, investments, rentals.
- Evidence of rental of the proposed property, and rental statements for any other properties held by the fund not taken as security (if applicable).
New Purchase Applications:
- Contract of Sale (fully signed and dated) for the property being purchased with either Trustee of Bare Trust/Property Trust as purchaser; or
- In VIC, SA and TAS only, a copy of a nomination form nominating the Trustee of the Bare Trust/Property Trust as purchaser.
Refinance Applications:
-
Previous independent legal advice with six months statements for the loan being refinanced.
PAYG & PAYG Self Employed - Income Verification:
-
Two most recent pay slips evidencing super contributions.
Self Employed Members – Income Verification:
- Last two years' SMSF cash management account statements or existing superannuation statements to be rolled over, evidencing contributions, cash, investments.
Trust Documentation:
- Certified copies of SMSF Trust Deed and any Deeds of Variation.
- Certified copy of Bare Trust/Property Trust Deed.
- Confirmation that SMSF is compliant on Super Fund Lookup.
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Disclaimers
In the interests of full disclosure, Savings.com.au and loans.com.au are part of the Firstmac Group. To read about Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.
