Smsf Lending

[Cozzie]

Hi guys,
I know this has been covered before, but not for a while now. I want to steer clear of the debates we have had in the past regarding personal guarantees etc and just discuss what's out there lately for smsf"s. I thought maybe we could share some experiences, since some of these products only started late last year.
I just started applying for a loan with St George and thought I would pass on some details. Please find below the details.

St.George Bank Self Managed Super Fund Lending – Overview

Commercial/Business Lending

Available For

Property acquisition
- Non specialised commercial properties
- Residential properties
- Specialised commercial properties allowed under the SIS act and acceptable to the Bank under normal policy guidelines

Investment purposed only

Loans secured by 1st registered mortgage only

Not available For

Owner occupied residential properties
Property construction
Property refurbishment or renovation
Low doc lending
Refinances
Specialised commercial property deemed unacceptable by the bank

Loan Amount

Minimum of $250,000

No maximum

LVR

Commercial Property

90% of normal LVR. 90% x 65% = 58%

Residential Property

90% of normal LVR 90% of 80% = 72% LVR

Rates

See separate sheet

Term

1 to 10 years.

Terms greater than 10 years will be considered where warrant term is greater than 10 years.

Repayment Type

Principal and interest

Interest only terms of up to 5 years are available

The interesting part is that they have used a "plug" interest rate of 8% and only 80% of my super inputs (to the smsf) and the usual 80% of rental income.The killer is that you must satisfy repayments to be able to repay the total amount out in 10 years to get approval.Once approved you can proceed with interest only if you like.
So this ,I think is very limiting for their product.
How do the other lenders compare with the above and does anyone have the latest base interest rates?
How have your interactions been with the other lenders.
Col

 

[bawatkins]

There are some Financial Planners offering the ability to have the SMSF invest in a commercial investment via a trust structure instead of using the Installment Warrant method.

In essence, setup a trust and a joint venture agreement. SMSF put's in 20% deposit and fees, borrowing is in individuals name into the trust.

Have seen two FP's use this method now and have deal currently with a lender for this setup that has been pre-approved and clients are looking for a property.

It's not as restrictive as the installment warrants and interest rate is lower.

 

[grossreal]

hi bawatkins
the smsf area is heating up at the moment and there is a few very interesting structures that are being built to bring in smsf to buy into the resi market
smsf were always able to buy into the comm market but they are now designing a few structures to buy into the resi market.
and I have looked at a couple for clients and they are very interesting
they are not the usual structure but for me they work at this stage.
they are thru accountants not financial planner but they will I think get to the planners
they are not mine so can't post and I think a few will be proprortary product and a couple may well turn out to be white lable products.
the use of non recoarse lending add to that leverageing and you have a very powerfull product
and also alot are being designed to use normal lending instead of the current 10 or 12% rates.
what was designed before was a structure of a loan to fit a requirement but now they are doing a design to fit a requirement but also to add leveraging and designed to meet the rules of the funds and thats a very different beasts
i will see how it all pans out but you will see these products appearing I believe unless they market just thru the accountans or super groups
have fun

 

[MikeF]

Hi guys,

Term

1 to 10 years.

Terms greater than 10 years will be considered where warrant term is greater than 10 years.

Repayment Type

Principal and interest

Interest only terms of up to 5 years are available[/COLOR]

The interesting part is that they have used a "plug" interest rate of 8% and only 80% of my super inputs (to the smsf) and the usual 80% of rental income.The killer is that you must satisfy repayments to be able to repay the total amount out in 10 years to get approval.Once approved you can proceed with interest only if you like.
So this ,I think is very limiting for their product.
How do the other lenders compare with the above and does anyone have the latest base interest rates?
How have your interactions been with the other lenders.
Col

Hi Cozzie

The St George Residential SMSF is in my view now one of the best available since they dropped their variable rate to 5.74%.

Not sure where you got all your info from but some of your details are I believe incorrect.

- Minimum loan amount is $10,000
- Max loan term is 30 years (15 yrs for commercial) with this also being the term repayment capacity is calculated on. "Plug" rate for resi deals is currently 7.46% pa
- Interest only terms up to 15 years are also available.
- Also on a case by case basis they will also look at how much a member/s can salary sacrifice in the future to meet serviceability criteria.

Compared to the other main SMSF lenders (CBA, Westpac, Bankwest, NAB) I think you will find that the Dragon is way ahead and no guarantee required a bonus.

Fees & charges for all SMSF lenders (including their lawyer fees for vetting deeds) are still excessive but here's hoping that they will come down in time

 

[Rolf Latham]

Hiya

What Mike said

I can add that from a brokers point of view the St George process appears to be a lot less hassle

ta
rolf

 

[Cozzie]

Hi Mike,
I should of added that my loan is a commercial loan.The info in red that I posted is a cut and paste from an email from a StGeorge business banking guy, who said he specialised in these loans.I would love to go with StGeorge but the servicing requirement of being able to repay the P&I in full in 10 years is a bit much for my situation.He said that this is only to approve the loan, what I select after that is up to me to choose within the product I take.
I know a lot of the time these banks have different stories depending on who you talk to.But I am searching for a loan now that does not require a guarantee and is happy with the figures below.
In a nutshell, I am buying a commercial factory for 1.25 million in Sydney.I have(my smsf) 600k in cash (of which the fees will need to be covered).The rent is 72k a year plus outgoings with a 5 by 5 lease in place.I was looking to borrow about 700k for this transaction.My superannuation input is 32k a year and I have a clear CRRA.
If anybody has any other possible lenders out there that would do it please PM me.I have spoken to a couple of brokers but the rate quoted by one was 9.9% and some 24k in fees.I'm open to suggestions and keen to proceed with this.
Col