Has anyone recently taken out a loan via their SMSF to borrow and buy property?
Which bank/ lender did you choose & why? Which loan product/ features?
Any experience to share of their process (how smooth it went, how long it took, pitfalls to watch out for, etc)
(we have a SMSF with corporate trustee, just looking to set up the bare trust and select a lender).. thanks
Hi Lawry,
In relation to lenders, La Trobe has killed the market since November 2013 when they introduced their SMSF Product. Majority of our loans went to them, however recently they have changed their loan offering which has posed a challenge or two.
With La Trobe its 5.6% and NAB is 5.88% (pls check). NAB is good however legal fees add up at approx $2100 however they are robust.
La Trobe is non-conforming but no offset but quick settlement and great client service is a positive. I'm a fan I must say.
St George has offset which is good, however client experience has not been great with them - we have had a few settle late which can be quite stressful for the member however everyone is different and will depend on time you need for settlement.
There is a new entrant into the market which we are working with at the moment on their pilot SMSF product with a lower rate than La Trobe at the moment.
Re Bare Trusts, this is specialised and seek advice, depending on your state, your bare trust will need to be executed before you sign the contract of sale (i.e QLD, SA) and just as important is the name on the contract of sale. Implications for non compliance can be a disaster for those who are unaware of the rules and regs.
Important to seek advice before you sign a contract of sale. We have legal guidance on the name to be used on the contract of sale which I am happy to share with you privately. This is a stamp duty issue and may impact finance (a good lawyer will pick it up).
Ensure you have a corporate trustee for your bare trust also - great that you have a corporate trustee for your SMSF.
Remember you can obtain a related party loan or 3rd party finance depending on your personal situation. Again seek advice on related party loans.
Lastly, please do a upfront valuation for the property, if the independent valuer does not value at contract price your up for the difference from the sMSF balance (i.e cash buffer please)
Hope that helps!!
Cheers Ivan