A Beginner’s Guide to SMSF Home Loans

A Self Managed Super Fund (SMSF) is restricted in its ability to borrow money, so utilizing an SMSF to acquire a loan is not an easy process. However, if it is a property that will be used as a business but in which the owner lives, lenders may qualify you to use the SMSF.

The trick is to have enough income in the trust to show that the loan payments can be made. Banks will usually review the prior two years’ tax returns as determine if the income is there and steady enough to justify the loan. If the trust is new, the income of the trust beneficiaries will be examined to determine the ability to repay the debt. If excess contributions are needed to prove the SMSF’s ability to make the payments, the loan may be denied.

Some lenders have less stringent requirements than others, but most banks do not include income from interest or shares already in your trust. They also may not approve you if you are close to the age of retirement, as your personal income will no longer be accessible. The best way to know if you will be approved for an SMSF home loan is to speak with a mortgage broker that has experience lending to SMSF trusts.