Purchasing a commercial or residential investment property through a Self Managed Super Fund is understandably appealing as the super fund offers an attractive tax environment and allows people to grow their SMSF for retirement.
Complications can arise where the purchase is funded via a SMSF loan and property values decline significantly, which appears to be the case over the past few years.
This situation has led to the major banks and other lenders withdrawing from the market and having to resolve issues with those SMSF’s whose loan to value ratios (LVR’s) have been breached, a situation which has been exacerbated by a reduction in most lenders LVR’s.
So, where does this leave SMSF Trustees/Members as we head into 2019?
If you are contemplating the purchase of a property through your SMSF, before you make any offers or commitments, seek professional advice from your preferred Financial Advisor and ensure they seek in principle commitment from a prospective lender/s – or get them to call us!
Whilst there are still lenders in the SMSF market, things are changing quickly and you may find that the deposit you need to pay is higher than you had anticipated, lending criterias are tougher, loans take longer to get approved, and rates and fees are likely to be higher than expected.
If this article has sparked any questions, contact your Ledge Finance Executive directly or contact us here and we will be happy to assist.
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