The Bank of Melbourne can help build your SMSF with a loan that assists you in purchasing investment property.
Whether you have an existing Self-Managed Super Fund (SMSF) or are planning on establishing one, the Bank of Melbourne Super Fund Home Loan is one source to look towards for funds to buy a residential property. Use this investment property as a rental that earns your repayments as your purchase adds value to your SMSF.
If you don’t have an SMSF or yours does not allow for this type of purchase, you can make the investment personally with Bank of Melbourne’s Portfolio Loan. This loan allows you to use your existing home's equity to make investments into your future.
Things to consider about Bank of Melbourne Super Fund Home Loan
In order to qualify for this specialised loan this type of investment strategy must be consistent with your SMSF’s investment strategy.
This loan can be used to purchase residential property in Australia. While the stipulations allow for borrowed funds to be used for maintenance and repair, it does not allow for 'improvements' to the property. The Super Fund Variable Home Loan will only be granted if the SMSF’s investment strategy makes allowances for the trust to finance a purchase with borrowed money.
This is a limited recourse loan, which means that should the SMSF default on payments, the bank only has claim to the property purchased, while the other assets held by the SMSF are off limits. Bank of Melbourne also has the Super Fund Fixed Rate Home Loan if you would prefer to fix the interest rate for your loan.
Features of the Bank of Melbourne Super Fund Home Loan
- Loan-to-Value Ratio (LVR). When the SMSF trustee is an individual, the loan amount cannot exceed of the property value. When the trustee for the SMSF is a company, 80% of the value of the home is allowed to be borrowed.
- Loan terms. This loan can be spread out over a period of .
- Repayment frequency. How often you make repayments will depend on the type of payments you choose to make. With principal and interest repayments you can make weekly, fortnightly and monthly repayments. When making interest-only repayments you only have the option of a monthly frequency.
- Repayment types. In addition to interest-only or principal and interest repayments you may make additional repayments on your Super Fund Home Loan. During the variable rate terms you can make those payments as often as you like and for as much as you want. While in the fixed interest rate period you are restricted to $10,000 annually.
- Offset account. You have access to a 100% offset account when you choose a variable rate loan. Fixed rate loans will allow you a partial interest offset.
- Loan amount. Borrow anywhere from to towards the purchase of your residential investment property.
Fees you can avoid
- Annual fee. There is no annual fee for the life of this loan.
- Split loan fee. This is $150 per request, but can be avoided if you don’t ask for the service.
Fees you can’t avoid
- Loan establishment fee. The charge is payable to the bank for the preparation and execution of your home loan.
- Valuation fee. The cost of assessing the value of the property to be used as security is the responsibility of the borrower. The cost starts at .
- Ongoing fees. An administrative fee of will be billed to your account each month.
- Mortgage stamp duty. Depending on where the secured property is located, a government entity may apply a mortgage stamp fee to your loan paperwork.
Know how much you want to borrow? Use our calculator to find out what your repayments will be
How to apply for the Bank of Melbourne Super Fund Home Loan
Before continuing on to the application, ensure that you meet the following eligibility criteria set forth by the Bank of Melbourne for this home loan:
- Residency. Residents of Australia may apply provided they have or are planning to establish an SMSF.
- Trust deed. The SMSF trust deed will need to have an expressed power to borrow.
- Purpose. The home loan must be for the purchase of an investment property that is residential in nature and located within Australia.
If you meet the eligibility requirements, have the following documentation available for your phone interview to make it go smoothly:
- SMSF documents. You are going to need a copy of your trust deed that has been certified along with financial statements that show contributions from members.
- Company trustee. If the SMSF trustee is a company, then a certificate of incorporation will be needed. A letter from an accountant stating that the company does not trade is also required.
If you are looking for a loan to help fund an investment opportunity for your SMSF, this loan is one to consider. Compare it with other investment loans to make sure that your SMSF is getting all of the benefits it needs.