Pending SMSF purchase and other purchase

Discussion in 'Property Finance' started by MarkA, 13th Oct, 2014.

  1. MarkA

    MarkA Member

    Joined:
    26th Apr, 2014
    Messages:
    10
    Location:
    Adelaide
    I'm in the middle of a purchase within my SMSF but have found a property that I'd like to buy outside of super. Would the pending SMSF purchase have any bearing on the other purchase?
     
  2. Terry_w

    Terry_w Member

    Joined:
    19th Mar, 2012
    Messages:
    9,610
    Location:
    Sydney, NSW
    Yes it could effect. Serviceability will be affected both inside and outside of super if a personal guarantee is going to be given. Make sure you can qualify with both the loan inside and the loan outside of super. Better yet, avoid giving a personal guarantee.
     
  3. Redwood

    Redwood Member

    Joined:
    9th Nov, 2013
    Messages:
    402
    Location:
    VICTORIA
    Avoiding a personal guarantee,,,,, mmmmn something i'm writing on at the moment terry.

    There is a lender that this scenario will not effect you serviceability...

    Cheers, Ivan
     
  4. Terry_w

    Terry_w Member

    Joined:
    19th Mar, 2012
    Messages:
    9,610
    Location:
    Sydney, NSW
    A cryptic last sentance Ivan.

    If the SMSF can support the loan on its own, including the contributions then there is 1 lender that will not insist on a guarantee - that I know of, there may be more.

    If a person gives a personal guarantee then the SMSF will need to be declared when going for futher borrowings outside of super and this will affect borrowings, generally.
     
  5. Paul@PFI

    Paul@PFI Tax, SMSF & Planning

    Joined:
    2nd Jul, 2013
    Messages:
    2,778
    Location:
    Sydney
    Another reason why human trustees should also be avoided in a SMSF and a company Trustee used.
    - Lower LVR for some/most lenders that do SMSF loans
    - Ties up personal credit
     
  6. Terry_w

    Terry_w Member

    Joined:
    19th Mar, 2012
    Messages:
    9,610
    Location:
    Sydney, NSW
    Good point. I have never done a loan for a SMSF with a personal trustee either, but the majority of SMSFs have individual trustees.

    A company trustee will also effect personal borrowing capacity if a personal guarantee is given.
     
  7. Marty McDonald

    Marty McDonald Mortgage Broker Syd

    Joined:
    5th Oct, 2010
    Messages:
    1,443
    Location:
    Sydney (North)
    If the SMSF loan is clearly self supporting I have been told by a few lenders just to make notes as such and not include the guarantee for servicing. Haven't tested that yet. There are some lenders who will ignore business debts if the business services the debts and no add backs are needed. Similar scenario and logic as this.

    However there are many lenders / most lenders who would want to the full liability in personal servicing which is not something people think about when entering into these arrangements!