I understand from a good broker I know that a major lender is now open to consider 100% LVR SMSF loans. The lender obviously seeks other loan security. They already sort of do this for standard SMSF loans. The guarantee...Now they seek additional non-super security that supports the guarantee.
Now I reckon this product has a place. Its not for everyone. Arguably its one for a established fund with other assets. Alternatively members with substantial assets outside super as well. Perhaps a issue with re-contributing - This may be an alternative. ie : Rather than make lumpy contributions or face a issue with inability to contribute after age 65 then this loan can achieve a shift in member capital into super ??
The problems I see:
- Investment strategy for the fund that supports such high leverage.
- Possible "recourse" issues if the leverage consumes fund liquidity. eg : The contribution income or other fund income could be consumed by the leverage.
- Cost ?? Perhaps a find in this position could consider an ungeared trust strategy at far lower cost that may be a bit more flexible.
- Financial advice sign-off. Many CFPs etc may baulk at such a strategy. Therefore the financial advice may need to encompass the members in a very broad manner so that super + non-super investments are all part of the advice.
Other peoples thoughts on the merits and concerns ?
Now I reckon this product has a place. Its not for everyone. Arguably its one for a established fund with other assets. Alternatively members with substantial assets outside super as well. Perhaps a issue with re-contributing - This may be an alternative. ie : Rather than make lumpy contributions or face a issue with inability to contribute after age 65 then this loan can achieve a shift in member capital into super ??
The problems I see:
- Investment strategy for the fund that supports such high leverage.
- Possible "recourse" issues if the leverage consumes fund liquidity. eg : The contribution income or other fund income could be consumed by the leverage.
- Cost ?? Perhaps a find in this position could consider an ungeared trust strategy at far lower cost that may be a bit more flexible.
- Financial advice sign-off. Many CFPs etc may baulk at such a strategy. Therefore the financial advice may need to encompass the members in a very broad manner so that super + non-super investments are all part of the advice.
Other peoples thoughts on the merits and concerns ?
