Sheesh - banks are so frustrating

[lizzie]

Existing customer of a bank ... never missed a payment ... trying to get finance for a new purchase thru the SMSF - could pay cash but know cannot re-finance once purchased, so want to keep some cash available.

Asking the bank for commercial loan of less than 50% ... but sheesh ... they want the fillings out of our back molars and the semen of our great grandchildren.

Actually simple, but time consuming stuff, like - a personal screen dump of the SMSF holdings is not sufficient, they want us to go into the Commbank as get the bank to do an "official" screen dump.

They want the accountant to put together a rental schedule (whatever that means) - so, for some reason, the rental statements and rental loan statements are not enough.

So close to telling them to get stuffed.

 

[Terry_w]

The golden rule comes to mind. Those with the money make the rules...

 

[lizzie]

I guess I'm annoyed because we "have the money" ... and don't really need them ... so to be endlessly running around for every expanding lists of requirements - that is usually not required for a resi/rental purchase - is driving me nuts

 

[Shahin_Afarin]

CBA are terrible with resi SMSF let alone commercial. How come you are going CBA for commercial SMSF and not say St George?

What's the commercial rate and fees on offer?

 

[Redwood]

CBA are terrible with resi SMSF let alone commercial. How come you are going CBA for commercial SMSF and not say St George?

What's the commercial rate and fees on offer?

With commercial its touch and go - we are going through another major 'conflict' with NAB - who have an incompetent 'internal' legal team - the stuff they ask for is just plain ridiculous.

CBA is almost non-existent in the SMSF space.

Shahin - we have 3 commercial smsf deals one with a loan amount of $110k, what are you getting for St George for commercial?

I was big on La Trobe always - however pushing heavily for offset there which they are working on so BOM/ St George preferred.

Cheers Ivan

 

[Shahin_Afarin]

With commercial its touch and go - we are going through another major 'conflict' with NAB - who have an incompetent 'internal' legal team - the stuff they ask for is just plain ridiculous.

CBA is almost non-existent in the SMSF space.

Shahin - we have 3 commercial smsf deals one with a loan amount of $110k, what are you getting for St George for commercial?

I was big on La Trobe always - however pushing heavily for offset there which they are working on so BOM/ St George preferred.

Cheers Ivan

At a high level I see 2 options. Go with a commercial lender that gives you a 25 year term (excellent strategy for cash-flow - interest repayments are stretched out) but you pay a premium on the interest rate and fees.

Other option is to go with a mainstream lender that will do only a 15 year term so you need to have a pretty damn good yield but rates (using St George as an example) is high 5's depending on the loan amount and fees are app fee of 0.25% and valuation fee which is dependent on the valuer.

There are no lenders that do offset commercial within an SMSF. Only Suncorp does commercial offset but this is outside the SMSF.

The reason I use St George is that have an excellent commercial SMSF team and legal fees are cheap because they have a new provider that skims on the doc prep by sending out one copy to the clients.

The closest lender to St George would have to be Westpac but they are like NAB in that its quite hit and miss.

 

[wylie]

I guess I'm annoyed because we "have the money" ... and don't really need them ... so to be endlessly running around for every expanding lists of requirements - that is usually not required for a resi/rental purchase - is driving me nuts

I wonder if they would accept some sort of "swap", take some security over the money you have if you put it in a term deposit or something? At least that could see you with a loan sooner than this, and you could work out the minutiae when you have more time (that is if you need money sooner than they seem to be wanting to give it to you).

We've been waiting 12 weeks for a loan to be funded (looooooong story). I would have bitten my own arm off to get it through earlier. I understand your pain.

 

[lizzie]

CBA are terrible with resi SMSF let alone commercial. How come you are going CBA for commercial SMSF and not say St George?

What's the commercial rate and fees on offer?

We're going with NAB ... but have our super sitting in CommSec as shares and cash (mainly cash now) ...

Wish I'd gone with Westpac now, as I've since started up a good working relationship with the local business manager, but getting to close to settlement to change boats.

 

[Paul@PFI]

I wonder if they would accept some sort of "swap", take some security over the money you have if you put it in a term deposit or something? At least that could see you with a loan sooner than this, and you could work out the minutiae when you have more time (that is if you need money sooner than they seem to be wanting to give it to you).

We've been waiting 12 weeks for a loan to be funded (looooooong story). I would have bitten my own arm off to get it through earlier. I understand your pain.

That is non-compliant for a SMSF lend. The fund cannot give a charge over any assets as proposed.

It may actually be faster and cheaper if the members seek a loan using other security (ie home). Then they lend to their SMSF under a related party lend 50% and the fund kicks in the cash. The members will take a mortgage over the fund property. (You own lawyer can do that easy). With many commercial SMSF loans this is often far far faster and cheaper. Lower fees, lower legals from bank etc....I have done these at the owner occupied rate of 4.85% with lower fees etc v's SMSFs at 6.5% with huge costs for the banks lawyers to review it all.

 

[Marty McDonald]

I wonder if they would accept some sort of "swap", take some security over the money you have if you put it in a term deposit or something? At least that could see you with a loan sooner than this, and you could work out the minutiae when you have more time (that is if you need money sooner than they seem to be wanting to give it to you).
.

Good suggestion. Probably not possible with smsf security requirements though.

 

[lizzie]

It may actually be faster and cheaper if the members seek a loan using other security (ie home). Then they lend to their SMSF under a related party lend 50% and the fund kicks in the cash. The members will take a mortgage over the fund property. (You own lawyer can do that easy). With many commercial SMSF loans this is often far far faster and cheaper. Lower fees, lower legals from bank etc....I have done these at the owner occupied rate of 4.85% with lower fees etc v's SMSFs at 6.5% with huge costs for the banks lawyers to review it all.

If the bank can't get it's act together in time for settlement - then this is the path we're going down and will tell them to get stuffed.

Have sufficient cash in the SMSF to buy the property outright ... but want to keep some cash aside for refurnishing and repairs ... so fortunately we already have a LOC against the PPOR with plenty of funds, so we can do a loan from us to the SMSF.

Accountant and broker and conveyancer don't like this option as it starts to the muddy the "arms length" requirements ... but it's nice to know we have alternatives.

 

[Terry_w]

I
Accountant and broker and conveyancer don't like this option as it starts to the muddy the "arms length" requirements ... but it's nice to know we have alternatives.

But most importantly what does the lawyer think?

 

[Greg Reid]

Lizzie,
A broker won't like it as they won't get paid, not sure why an accountant would have an objection and why would a conveyancer?

It is far easier to do an 'internal' loan than going through a lender. You have a degree of control of the interest rate charged, you don't have the bull**** that a lender wants you to go through nor the issue of a guarantee perhaps but make sure it is a legal document with agreed terms done by a solicitor who knows what they are doing.

It will depend a little on your own goals but it should be considered. You should be able to refinance in future with a SMSF lender if required when it suits your needs.

 

[Terry_w]

Lizzie,
A broker won't like it as they won't get paid,

The broker might still make the same commission if Lizzie borrows herself using other property and then on lends this to the SMSF.

But this is legal advice and none of the advisors mentioned are able to give this.

 

[Greg Reid]

Terry,
It continues to amuse me where professions claim ownership which largely has been artificially created by interest groups and then poorly enshrined in legislation.
You would know as many lawyers who just have little idea as to structure, or tax effectiveness as I do with accountants and brokers. Just because we have a qualification does not mean we are competent in all aspects.

From AFSL, which in theory deals with advisers in financial products, the boundaries have tried to be stretched by ASIC to include SMSF because of the structure including 'advice' on property. Does that mean all trusts are now included to be covered by AFSL?

I am having trouble seeing how credit advice to whether to borrow direct from a lender or via other means (self funded) is now seen as being legal advice. I certainly would advocate legal advice to draw up appropriate agreements but an accountant or broker not be able to give a general view to a client as to options, we do a disservice to clients if we are so restricted.

 

[Terry_w]

Terry,
It continues to amuse me where professions claim ownership which largely has been artificially created by interest groups and then poorly enshrined in legislation.
You would know as many lawyers who just have little idea as to structure, or tax effectiveness as I do with accountants and brokers. Just because we have a qualification does not mean we are competent in all aspects.

From AFSL, which in theory deals with advisers in financial products, the boundaries have tried to be stretched by ASIC to include SMSF because of the structure including 'advice' on property. Does that mean all trusts are now included to be covered by AFSL?

I am having trouble seeing how credit advice to whether to borrow direct from a lender or via other means (self funded) is now seen as being legal advice. I certainly would advocate legal advice to draw up appropriate agreements but an accountant or broker not be able to give a general view to a client as to options, we do a disservice to clients if we are so restricted.

This involves the interpretation of the SIS Act. Legal advice, no AFSL needed. Brokers can advise on the credit aspect, but not whether it is possible to borrow from a related party etc. Accountants, or tax agents can advise on the tax aspects but not the legal aspects.

Trusts are legal relationships and only lawyers can advise on them...

 

[lizzie]

This involves the interpretation of the SIS Act.

Which is why we want to keep it all separate ... but if forced into the alternative - lots of documents drawn up and a very very very clear paper trail all the way!

The ATO scares me more than the Feds

 

[Terry_w]

Which is why we want to keep it all separate ... but if forced into the alternative - lots of documents drawn up and a very very very clear paper trail all the way!

The ATO scares me more than the Feds

Really there is not much to worry about. It is just a loan from A to B.

 

[speary]

Terry,

In regard to your comment about the interpretation of the SIS Act being legal advice, how then are SMSF auditors qualified to audit super funds?

Surely they are required to interpret the SIS Act at times to determine if the SMSF has a reportable breach etc, and most of these auditors are not lawyers.

I feel the lines are very grey between the lawyers, accountants and financial advisers, and it seems that the removal of the accountants exemption is a move to try and define the line a bit more.

Like Greg, I agree that as accountant/s I/we need to be able to give a general overview of a clients options otherwise we won't have any clients. Obviously we choose our words carefully but the classic example is when a client comes in and wants to run a small business through a trust.We can't just push them away and say sorry can't talk at all about that because it involves a legal relationship...

 

[Paul@PFI]

Terry,

In regard to your comment about the interpretation of the SIS Act being legal advice, how then are SMSF auditors qualified to audit super funds?

Surely they are required to interpret the SIS Act at times to determine if the SMSF has a reportable breach etc, and most of these auditors are not lawyers.

I feel the lines are very grey between the lawyers, accountants and financial advisers, and it seems that the removal of the accountants exemption is a move to try and define the line a bit more.

Like Greg, I agree that as accountant/s I/we need to be able to give a general overview of a clients options otherwise we won't have any clients. Obviously we choose our words carefully but the classic example is when a client comes in and wants to run a small business through a trust.We can't just push them away and say sorry can't talk at all about that because it involves a legal relationship...

SIS Regulations prescribe the matters to be audited by ASIC licensed auditors. ITAA and related laws contains requirements to provide a regulatory return after audit and to report audit contraventions.

The auditor is just a communicator. They don't give legal advice or provide legal services. The ATO decides if a reported matter is a breach or a matter to be ignored. The auditor forms a opinion and reports it to the fund and ATO. ITAA doesn't permit a tax agent to do that. Or a lawyer. Or a financial adviser. The financial advise can advise how to fix many of these matters but the accountant might not (eg a contribution or pension issue). A lawyers cant. Without an AFSL an accountant cant.

Each professional should know their boundaries and stop and refer to another when needs arise. The SIS Act is a strange beast. Its part tax law, part super, asset protection, estate planning and trust...and then common law can prevail .... There issue of auditors having power to interpret SIS is implied in statute. Interpret - Not advise on.

I'm not an expert in electricity and have no license to install. I would recommend anyone changing lights use a sparkie. I don't need qualifications in electrical cabling to say that.

There are lawyers authorised to give tax advice who would get sued if they tried. Assuming all solicitors are experienced in all areas of law is a mistake. Ditto all professions have areas of speciality. The individual should always stop and declare their weakness and refer.

The legal practitioners act just prohibits legal services. Not all legal matters are legal services.