SMSF lending via an SMSF mortgage or an SMSF loan has increased considerably in recent years. As of June 2013, APRA noted there were 509,362 SMSF funds which was an increase of 7.1% from the previous year. This equates to over $506.0 billion dollars being managed by SMSFs versus $970.1 billion dollars held by APRA-regulated superannuation entities. This means that SMSFs now control about a third of the total superannuation assets in Australia. More information can be found from the APRA website at http://www.apra.gov.au/Super/Publications/Pages/annual-superannuation-publication.aspx
Pull-back by the Big-4
As of 2-Oct-2018, all big four lenders, CBA, ANZ, Westpac and NAB have all pulled out of the SMSF lending space. As a professional mortgage broker providing a full range of home loans, I believe it is the result of the royal commission where there were instances where investors bought poor performing properties and had to take a loss on the the Net Asset Value within their SMSF. This is something the regulators and government do not want. As such, all major lenders have pulled out of the space but will continue to support their existing SMSF mortgage and SMSF loan clients.
SMSF loans and property
Considering that property is one of the largest asset classes held in superannuation funds, it makes sense that more people are looking to purchase property within their SMSF.
What type of property can be bought within a SMSF?
Residential – investment properties.
Commercial – different types of properties including commercial, retail and light industrial are common to be held within the SMSF.
Rural – rural residential investment properties can be held by it is more difficult as lenders are shying away from rural properties in general.
What do you need to be aware of if you are thinking of purchasing property via an SMSF?
The compliance requirements to purchase property within an SMSF is quite onerous. You need to make sure: