The simple answer is no but there have certainly been some changes over the past 12 months with all major lenders pulling out of this space.
Regulators have cited systemic problems being caused by SMSF investors encouraged to leverage their SMSF and invest in a single residential property limiting the diversity of their fund and exposing it to dangers of loss in a falling property market where it’s difficult to find tenants. Although this point of view may be justified one could fairly argue this is related more to a poor investment choice rather than a problem with the idea of borrowing in your SMSF.
With major lenders pulling out the spotlight has been shining on non-bank lenders who are carving a niche in lending to SMSF’s. These lenders tend to be more agile and are prepared to offer, in some cases, much more favourable terms than the majors ever were.
A trend that is starting to gather pace is lending to finance commercial property purchases buoyed by a change in stamp duty rules in SA that allow people to transact on commercial properties free of stamp duty.
Business owners are now seriously considering the benefits of buying their business premises in their SMSF using a specialised commercial SMSF loan with terms comparable to residential loans like 30 year terms, 5 year interest only periods and no annual reviews giving them much needed flexibility in paying the loan back whilst taking the landlord out of the picture offering security for their business.
As with all investment decisions, good quality advice is at the very heart but with the right advice borrowing to buy property within your SMSF, commercial or residential, is a strategy that may work for you and there are lenders out there who are prepared to help.
Article written by Michael Karp.
Michael is a franchise principal with Smartline Personal Mortgage Advisers. If you’d like to know more about borrowing in your SMSF please contact us on (08) 8172 9172 or by email at firstname.lastname@example.org and ask for an introduction.