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Buying property through your SMSF (self-managed super fund) can be a sensible financial decision for many, as it allows you to acquire the home you want while boosting your superannuation property assets. But if you already have an SMSF loan in place, particularly one with a high interest rate, you may not be getting the best value for money.
The good news is that SMSF loans can be refinanced just like any other home loan, allowing you to secure a better deal. However, there are several important factors you need to take into account.
If the trustees of an SMSF decide to invest in property, they’ll need to take out an SMSF home loan to access the funds they need. Purchasing property through your SMSF has been allowed in Australia since 2007. In 2011, the ABS revealed that 3.5% of SMSFs had invested in residential property and 11.4% had invested in non-residential property.
These loans are similar to an ordinary home loan but are more difficult to process, and each lender will have its own restrictions on how its loans can be structured and the purposes they can be used for.
You are typically only allowed to buy an asset through your SMSF using a limited recourse borrowing arrangement (LRBA), which means that lenders can’t seize any of your other SMSF assets if you default on an SMSF property loan.
Use our comparison tables to compare several SMSF home loans to get an idea of the fees and features they offer.
Please note that very few lenders still offer SMSF home loans. A mortgage broker could help you find suitable products from specialist lenders.
The main benefit of refinancing an SMSF home loan is the same as refinancing any other home loan — getting a more affordable deal. If your loan has a high interest rate attached and there are other similar loans available on the market offering lower rates, you could save thousands over the life of the loan by switching.
Alternatively, you could switch to a loan that offers different and more flexible features. For example, you might want to switch to a loan with an offset account to minimise your interest repayments, or you could consider a loan with terms and conditions that better suit your needs.
The SMSF loan market has grown substantially in Australia in recent years. Competition among lenders has increased and there are now many more options available to those shopping around for a better deal.
Regularly reviewing your loan and a range of other borrowing options available can help you save money and continue building a secure financial future.
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I have a unit purchased by super without loan,can I refinance this property ?
Hey Carrie,
Thank you for reaching out to us.
While it’s possible to refinance SMSF home loan, there are several factors to consider and this page is a guide on that.
You may also want to consider getting professional advice that fits your financial situation that would aid you in your decision.
Before applying, please ensure that you meet the eligibility criteria and requirements and to read the details, as well as the relevant Product Disclosure Statements/ Terms and Conditions of the option before making a decision and consider whether the product is right for you.
Best,
Maria