SMSF Loans Melbourne
SMSF Loans Melbourne take out the pain when you are buying a property in your SMSF?
And it is easy to be Unsure about the right structure or would like more information?
For you Free SMSF Finance Assessment Go Here
How Much Can a SMSF Borrow?
SMSF Loans are referred to as Limited Recourse Borrowing Arrangements.
Each lender will have maximum amounts for a SMSF Loan and can differ between Residential and commercial loans. Also, some lenders will not provide a SMSF Loan for new buildings.
The amount a Self Managed Super Fund can borrow will mainly determine by the income coming into the fund on a annual basis. This includes employer contributions of all members, returns from any investments and the proposed rent from the property purchase. Any cash left in the fund after the property purchase will have a deeming rate of approximately 3% P.A. depending on the lender.
So what is Limited Recourse Loan Arrangement?
Limited Recourse Borrowing Arrangements or LRBA, these SMSF loans are designed to limit the lenders ability to sell other assets in the Self Managed Super Fund if there is a default on the SMSF Loan.
The lender is limited when there is a default on the SMSF Loan to the property being used as the security. This arrangement prospects the Self Managed Super Fund from liquidation from the lender.
What Structure should the fund have?
It is important you have the right structures in place before your SMSF enters a contract to buy a property. Particularly if the SMSF is borrowing to buy property.
If the fund is buying a property and requires a SMSF loan, then there needs to be a bare trust set up for each of the property purchases.
Although not shown in the diagram both the SMSF and the bare trust need to have a trustee, most SMSF Loans require the trustee to be incorporated i.e. PTY LTD with all the fund members being directors of the PTY LTD.
When setting up this structure we encourage you work with your Accountant or Financial Planner ensure the correct process is adopted.
What does SMSF Loans Melbourne do?
SMSF Loans Melbourne supports you through the entire process and we work with your accountant, financial planner, solicitor and real estate agent to aid successful outcomes when the SMSF is borrowing to buy property.
If you have any questions regarding buying a property in your SMSF please contact SMSF Loans Melbourne for a free catch up or just a quick chat to review what your SMSF is doing regarding buying property and how we may help.
Contact SMSF Loans Melbourne here.