Historically, investors have been able to borrow up to 80% LVR on residential properties.
This is now changing with at least 1 lender doing up to 100% LVR loans.
Whilst a lender is unwilling to 'over lend' under any superfund lending application, what can be done is to allow for a property guarantee (i.e. existing home loan customer with first charge mortgage with the lender) by the directors of the SMSF.
What this would be is cross securitisation of the properties. Whilst I strongly dislike cross securitisation and everyone here knows the disadvantages that comes with cross securitisation - here are the benefits when applied
1. Negative gearing - Rather a negative gearing of 80% on say a $1mil purchase ($800k), you can have a negative gearing of $1mil lend.
2. To not use up the concessional/non concessional contributions
3. To not use up all funds within Super, frees up cash to allow for next purchase or other investments or even money to develop as finance cannot be obtained to develop/renovate under SMSF but cash within the SMSF can be used for such purposes.
The disadvantages includes:
1. Equity is lost against existing property - in case you want to do future equity releases in order to purchase property outside of the SMSF
2. Lender will need to order a valuation on both properties when drawing upon funds from the property outside of the SMSF
3. Impossible to refinance the property sitting outside of the SMSF to another if need be.
This strategy isn't for most investors but can work for certain investors that are particularly active within the SMSF - i.e. developers.
Note: These applications are not particularly easy to get across the line and it is recommended that a full SOA be sent into the bank with they assess the application.
This is now changing with at least 1 lender doing up to 100% LVR loans.
Whilst a lender is unwilling to 'over lend' under any superfund lending application, what can be done is to allow for a property guarantee (i.e. existing home loan customer with first charge mortgage with the lender) by the directors of the SMSF.
What this would be is cross securitisation of the properties. Whilst I strongly dislike cross securitisation and everyone here knows the disadvantages that comes with cross securitisation - here are the benefits when applied
1. Negative gearing - Rather a negative gearing of 80% on say a $1mil purchase ($800k), you can have a negative gearing of $1mil lend.
2. To not use up the concessional/non concessional contributions
3. To not use up all funds within Super, frees up cash to allow for next purchase or other investments or even money to develop as finance cannot be obtained to develop/renovate under SMSF but cash within the SMSF can be used for such purposes.
The disadvantages includes:
1. Equity is lost against existing property - in case you want to do future equity releases in order to purchase property outside of the SMSF
2. Lender will need to order a valuation on both properties when drawing upon funds from the property outside of the SMSF
3. Impossible to refinance the property sitting outside of the SMSF to another if need be.
This strategy isn't for most investors but can work for certain investors that are particularly active within the SMSF - i.e. developers.
Note: These applications are not particularly easy to get across the line and it is recommended that a full SOA be sent into the bank with they assess the application.
