NAB launch SMSF lending

I see the NAB are the first of the majors to enter the market with a reasonable priced product for SMSF but as usual a very conservative LVR.

Hopefully this will cause the others to be a little more adventurous in their policies.
 
Hi Richard,

Don't get too excited the big four are too busy feeding on the carcasses of the small securitisors and the Macquaries of the world reaping in all the normal mortgages. It's still the second tiers that are really out there for SMSF borrowing.
 
Pat

I agree all of the SMSF lending we have done to date has been done with the second tier lenders bit it was a refrsshing change to see one of the majors hit back.

Admitedly the product details are typical NAB (nice fat half yearly line fee etc) and at 65% LVR they wont be getting any of my clients business but from what i hear another one of the majors is only weeks away from launching its product which will rival Seiza etc etc.
 
Hi Richard

I am doing one of these at the moment and finding it an absolute nightmare. They seem to be very, very picky. They even ordered a second "check valuation" - never had that before.

Is that your expereince?

Cheers

Stuart
 
Hi Stuart

You have hit the nail on the head.

Talk about wanting to X the T's and double dot the i's.

And clients say we dont earn our commissions lol
 
Brave no just fiscally literate

Even after the new tax alert? Very brave indeed.

Hello asdf, on the contrary there is nothing brave about it. If your going to purchase a property in your super fund you want to do it by purchasing a commercial property with a commercial yield of 8-10% net.

If you have a business and your the tenant this is attainable. I would not be comfortable borrowing 80% though, as some of the second tier lenders would allow. I think the nab's approach of only allowing a limited recourse loan with a LVR at 65% is prudent. My preference would be to put up 50% and then beat down the banks half yearly line fee and or interest rate.

The beauty with the commercial property is that if you have excess space and can also sublet some of that space you can push your yield out to 10-12%.

The ATO alert is really about noncommercial arrangements rather than being against SMSF funds using property warrants to purchase a real estate investment. For example if you purchased a home through your SMSF and moved into it this would contravene the super laws with regard to sole purpose test as well as the member obtaining a benifit that is not allowed.
 
I think the nab's approach of only allowing a limited recourse loan with a LVR at 65% is prudent. My preference would be to put up 50% and then beat down the banks half yearly line fee and or interest rate.

My sentiments exactly however in saying that at the presentation in Qld from the head of Credit they advised us there would be NO discounts on interest rates, application or Line fees irrespective of the number of deals you did or the size of the deal.

We were told if you didnt like then take the business elsewhere.
 
I'm writing my first SMSF loan at the moment also, this one is through Westpac. The process is pretty painful, particularly the set up of the numerous entities that have to be used, I'm actually getting some training from their lawyers next week on the structure they require.

Regards
Alistair
 
Yes Alistair dont you just love them.

What sort of a product are Westpac offering ?

I have done about 6 of these types of loans now and each time have had problems with the documentation or the valuation or the evidence of income or the Deed. The list goes .........
 
Hi Richard / Alistair

This is music to my ears! I have had a hell of a time this week but I am pleased to hear that its normal (well not pleased, but you know what I mean). Let's hope it gets easier.

Cheers

Stu
 
Hi Richard,

It's a commercial loan. They will do 65% with normal rates etc. The issue is the number of entities that are set up, getting the trust deeds set up correctly etc. All in all it is a lot of work and is expensive for the client because of the legals.

Westpac are also offering residential loans, max leverage is 75% from memory, I can't recall pricing but I think they are just normal rates, I assume you can't use Rocket products.

Regards
Alistair
 
Hi Alistair,

What are the costs for Westpac and the interest rate because we need more competition for Seiza who are very good but their costs are high? Agreed the legals are costly on this product.
 
Hello asdf, on the contrary there is nothing brave about it. If your going to purchase a property in your super fund you want to do it by purchasing a commercial property with a commercial yield of 8-10% net.

Yes it is. The alert highlighted that the ATO are investigating loans to SMSFs where there is capitalisation of interest (development funding) and where personal guarantees are provided by the members (amongst other things they are going to look at). As far as I am aware, Calliva are the only guys who have managed to convince RBS to lend ton a non-recourse basis.

I doubt NAB will provide a 65% commercial lend non-recouse, without a personal guarantee. Even a standard full recourse loan attracts only 70% LVR for commercial. I don't work in Risk but perhaps the banks have done their numbers such that they can lend non-recourse. Perhaps jack up the LMI but then you'll have all the mortgage insurers up in arms cos they'll have to write all the bad loans off. Anyway, if you have to give a personal guarantee, I'd wait to see what the ATO comes out with.
 
I was at an expo recently and heard Vicne Scully from Calliva speak and I also spoke to him at length in person during the two days.

Basically just less than 3,000 for the trust deed. Establishment fee of 1.5 %. LVR of 75 % on residential and from memory 70 % on commercial. Limited recourse loan with no right over members other assets or SMSF assets. No personal guarntees. Interest around 1 % above standard variable rate and indication was that five year fixed rates are cheaper than standard variable.......hmm maybe a clue about future intetrest rate direction in the medium term. No further fees or involvement unlike Quantum Warrants product that want to run the show for you as well so the commissions "keep on keeping on"

In contrast I also spoke to a Westpac rep there and their indicative rates were higher with LVR's in the 60's and personal guarantees required. Can't remember the rest of their commparative costs off hand, but he too was keen to hear Vince Scully speak.
 
Westpac pricing is at business lending rates with no discounts, + 0.75% for residential security and +1.5% for commercial, not fantastic. 1% upfront also I think. It is expected that this will come down.

Regards
Alistair
 
Yes it is. The alert highlighted that the ATO are investigating loans to SMSFs where there is capitalisation of interest (development funding) and where personal guarantees are provided by the members (amongst other things they are going to look at). As far as I am aware, Calliva are the only guys who have managed to convince RBS to lend ton a non-recourse basis.

I doubt NAB will provide a 65% commercial lend non-recouse, without a personal guarantee. Even a standard full recourse loan attracts only 70% LVR for commercial. I don't work in Risk but perhaps the banks have done their numbers such that they can lend non-recourse. Perhaps jack up the LMI but then you'll have all the mortgage insurers up in arms cos they'll have to write all the bad loans off. Anyway, if you have to give a personal guarantee, I'd wait to see what the ATO comes out with.

Helloo asdf; If you go back and check the post entitled "property purchases using smsf funds" on 06.04.2008 and earlier my exchanges with which you also contributed you'd see I have always argued that it is illegal to give a personal guarantee if you are a benificiary of a super fund that takes out a warrant to purchase a commercial property.

As for the LVR we both know that the banks knock off 20% and then give you an LVR of 70% on the remaining 80% and is one of the reasons why we are not faced with the same subprime debacle our american cousins have. I also agree that 65% is a hard ask for the big four to agree to a limited recourse loan and in my earlier posts I have always argued that 50% is more realistic for the first warrant instalment. That knocks out 85% of people with super.

Why are you so against purchasing a commercial property in super. Are you employed as a share broker or did you just have a scottish grandmother that taught you the refrain, "never a lender or borrower be"
 
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hi all
the problem I see with this product is that you can't refinance or unlock any equity in the property once the loan is in place.
and the max lvr loan amount from the meeting on monday is 72%comm 80% resi with quarentee ( and not sure if that legal at this stage) and 75% resi and 67% comm no quarantee
and then if and when the property does go up
the only way to gain any way into the equity is to sell it.
which is not the best way to go from my looking at it.
the product might be ok for someone retireing in say 5 years but even then the rates and costs are so high.
so I am at a bit of a loss why someone would take the product.
it does seem like its horses for coarses but when you can't assess the equity in the property and you cant do a second lender behind the major (this may change but from the meeting on monday thats what I was told) there seems to be alot smarter ways of doing it. and a few of the smarter people on this board who setup these smsf where do you see someone benefiting from these product and its not just another product to get fees and make it easier to get fees
 
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