SMSF Loans

Purchasing an arm’s length residential investment or commercial investment property, we have the product for you.

If you’re researching the market we’d be more than happy to talk to you about your options, or refer you to one of our highly-trusted partners that establish the SMSF on your behalf.

Frequently Asked Questions

+ What is a Risk Fee?

A Risk Fee is a once-off charge payable by you when the amount of money you borrow for the purchase of a home or asset if higher than that lender’s acceptable LVR . For a home loan, this is usually 80% of the value of the home (80% LVR).

+ No Deposit Home Loans

Most lenders have moved away from the no-deposit home loan, although there are a few products available with very strict criteria. Excluding the no-deposit opportunities made available to the medial industry and other high-income and lower-risk professional groups, you should demonstrate a near-perfect credit record and very stable employment history. As we’ll come to describe, the Guarantor option tends to be one that makes entry to the property market a relatively easy process, even if your own credit record is a little questionable.

+ What is Meant by "Serviceability", and How is it Calculated?

When you apply for a home loan, a lender will take a large number of factors into consideration when deciding whether or not to approve your application. The Serviceability assessment determines if you can comfortably “service” the loan repayments after considering all of your income, expenses and liabilities.

+ What is the Role of a Conveyancer?

Conveyancing is the legal process of preparing and organising the required documents involved in the transfer of property from one person to another. The conveyance of a property is undertaken by both those who are selling and those who are buying property, and is conducted by a conveyancer, solicitor, or the individual buying or selling their property, although as we’ll come to discuss, the latter option is one that you’ll likely choose to avoid.

+ What is a Low Doc Loan?

Low doc (low documentation) home loans can benefit people who don’t have access to the level of information banks and lenders often require for your standard home loans. If you are a business owner, contractor, seasonal worker or freelancer, you may not have all the documentation usually required or the employment history often requested. Your income may be irregular, but it may still be high enough and stable enough to make the required repayments.

+ Introductory Rate Home Loans

Buying a house is filled with expenses, some examples being legal fees, stamp duty, application fees, as well as the initial required deposit. On top of these initial costs, there can be additional expenses, especially in that initial year, as you begin to personalise your home and make it your very own.

+ Split Home Loans

A ‘Split Home loan’, ‘Split Facility’, or ‘Split Mortgage’, is a home loan that combines a Fixed Home Loan and a Variable Home Loan. In essence, a Split Loan allows you to split a home loan into two accounts, both of which attract interest rates and features that are specific to that loan.

+ Construction Home Loans

A construction loan, also known as a building loan, is a lending option that provides you funds to pay your Licenced Builder (or fund your Owner-Builder project) throughout each stage of your build or renovation process. It has a vastly different loan structure to home loans designed for people buying an existing home.

+ Fixed Home Loans

A fixed rate loan, as opposed to the Variable Rate Home Loan, is one where the rate is fixed for a defined time period. Not as popular the variable product, Fixed Rate loans still offer a range of features that make the loan type worthy of consideration, particularly if you’re looking for certainty in the first couple of years of your mortgage.

+ Variable Home Loans

The Variable Home Loan rate is the most popular home loan type in Australia. An interest (and comparison) rate is set for a particular product and will vary depending upon cash rate changes as dictated by the Reserve Bank of Australia. The variable rate set by a bank doesn’t necessarily move proportionally to official cash rate changes, so the bank’s variable rate is typically called the Bank Standard Variable Rate.

+ Interest Only Home Loans

Most home loans are based on principal and interest. That is, you pay off the principal amount (the amount you have borrowed) in addition to the accumulated interest. However, when servicing an interest only loan you will only pay off the interest component for a period of time, thus greatly reducing your monthly obligations.

+ What is a Home Loan Package?

A Home Loan Package is a home loan bundled with other financial or banking services and products with the main attractive feature usually being an included discount on the home loan interest rate. At the time of this writing, the interest rate reduction was around 0.8% to 1.4% for a variable rate home loan.

+ Basic Variable Rate Home Loans

A Basic (or No Frills) Variable Rate Home Loan is a straight forward non-complicated loan with minimal features, a competitive interest rate and no annual or monthly fees. Payment of an establishment or application fee varies between lender with some charging $0.

These loans have minimal features (eg no offset accounts) and hence the lower interest rate. This lower interest rate making this type of loans suitable for those wanting to keep their repayments minimal and who don’t need access to any additional loan features.

+ Home Loans for Legal Professionals, Accountants, Barristers, and Lawyers

Barristers, Lawyers and accountants are recognised as low-risk borrowers with high incomes and for this reason, you can borrow up to 90% of the value of the property and pay no Lenders Mortgage insurance (LMI). Normally LMI is payable if you borrow more than 80% of the value of the property. As an example, the purchase of a $1,000,000 investment property with a $100,000 deposit would save you approximately $23,000 in LMI costs.

You may also be eligible for a interest rate discount and when purchasing multiple properties, some lenders may allow you to borrow to a higher overall debt level.

+ Home Loans for Doctors and Medical Professionals

Medical doctors are considered ‘low risk’ by the majority of lenders because of higher incomes, and the likelihood that income will increase over time. Additionally, Doctors are considered to be future customers of other types of products. It’s for this reason that banks apply various discount on their products.

+ What is the LVR, Loan to Value Ratio?

The Loan to Value Ratio (LVR) is the amount you’re borrowing represented as a percentage of the property’s value. The loan amount is divided by the purchase price of the valuation amount, then multiplied by 100 to make a percentage. For example, if you’re purchasing a home worth $500,000 and you wish to borrow $400,000 (so, you have a $100,000 deposit), the LVR is 80%.

+ What is a Comparison Rate?

A comparison is the true cost of a loan every year, including fees and charges, and taking the product attributes into account. While an interest rate may be low to lure you into that product, the comparison rate provides a more realistic understanding of the cost of a loan, and allows you to more easily compare one loan against another. It is required by law that the comparison rate always accompany an interest rate and it is incumbent upon mortgage brokers to discuss these comparison rates with you.

+ What is the Difference Between Pre-Approval and Full Approval?

Pre-approval simply means that the lender has evaluated your property purchase, your basic details, and has obtained other early details, in order for you to start looking for property. It provides you with an informed and reliable estimate of your true borrowing capacity, but it doesn’t necessarily fully consider your serviceability or credit history (the latter two stages are very much dependent upon the bank). So, the pre-approval is conditional upon the property you wish to purchase being acceptable security, and your lender confirming your income and other information provided in your application.

Keep in mind that no pre-approval can be relied upon until papers are signed. Conditional or Pre-Approval means a lender has assessed your financial situation and the estimated loan amount they propose for you might be formally approved once you find a property.

It is highly recommended you consider pre-approval before house-hunting so you’re fully appraised of how the bank wills assess your financial position – you need to know exactly how much you can borrow. Certainly, if you’re going to an auction or putting a deposit down on a property you’re leaving yourself open to potentially losing those funds if your finance is not successful.

+ What is Meant by the Term "Equity"?

Equity is the value of an asset (e.g house, car) minus any debts attached to that asset.

For a property, the equity would be the current market value of the property minus the balance of any loans attached to that property.

As an example, say we have a property as follows:

  • The current value of a property is $1,000,000


  • The loan balance against that property is $600,000

The equity in this property would be $400,000. That is $1,000,000 – $600,000 = $400,000

+ Property Postcode Restrictions (LMI & Lending)

Lenders assess mortgage applications differently based on the location of the property being offered as security. A lender, or the Lenders Mortgage Insurance provider, will apply more rigid lending policies in high-risk locations to limit their risk. This risk assessment often means that your maximum permissible LVR (and your borrowing amount) to be lower.

+ What is the First Home Super Saver Scheme (FHSS)?

If you’re a first home buyer, you may be eligible to withdraw voluntary super contributions you’ve made to put toward a home deposit. Through the First Home Super Saver Scheme (FHSSS), first-home buyers may be able to use Australia’s superannuation system as a tax-effective way to save for part of their home deposit.

The FHSSS applies to voluntary superannuation contributions made from 1 July 2017. These contributions, along with deemed earnings, can be withdrawn for a home deposit from 1 July 2018. For most people, the FHSSS could boost the savings they can put towards a deposit by at least 30 per cent compared with saving through a standard deposit account.

+ Can Rent Be Used as Genuine Savings?

Getting into the property market is difficult when you’re paying rent because you’re still required to save a 5% deposit towards a new home. While the deposit is still usually required, many lenders will accept your rental history as a substitute for your ‘Genuine Savings‘, meaning that any required deposit may be non-genuine savings. This recognition of your timely rent payments equal to an amount of the 5% genuine savings deposit is limited to a number of banks on our panel (not all banks will accept rent as a means of demonstrating your genuine savings record).

You may be able to borrow up to 95% of the property price, and up to 97% in some cases (including LMI).

+ Self-Managed Super Fund Loans

Self-Managed Super Funds are often used by investors as a means to take control over their superannuation for the purpose of investing in property of their own choosing. However, Self-Managed Super Funds – particularly when used for investing – is a complex subject that requires the guidance of a suitably qualified professional.

A Self-Managed Super Fund requires that you set up a special type of trust that manages your super funds. Just like any kind of super fund, and if you’re not self-employed, your employer will pay into your own fund rather than somebody else’s. However, unlike a managed fund, you will have full control over what assets or investments your fund will make.

+ What is Genuine Savings?

The term Genuine Savings refers to the funds that you have saved genuinely and gradually over time, usually between three to six months. It excludes gifts, tax refunds, one-off payments from the sale of assets, such as you car, Home Owner Grants, and work bonuses. The term ‘Genuine Savings’ is one that is quite fluid in that many lenders and LMI insurers will have their definition.

+ What if I Have a Bad Credit History or Outstanding Debts?

We believe that former adversity shouldn’t impact upon your ability to get a home loan, and we specialise in sourcing suitable products for those that have experienced adversity via a less-than-stellar credit history, bankruptcies, defaults, Part IX debt agreement, or judgments. Sometimes life gets in the way of your wealth creation or home-ownership goals, so we help you get back on track with finances specifically suited to your circumstances.

+ What Are Deposit Bonds?

If you are purchasing a property, and you don’t have your deposit readily available, then a deposit bond may be a suitable solution. A deposit bond is a guarantee, issued by an insurance company, to the vendor of the property you are purchasing, that they will receive their 10% deposit, even if the purchaser defaults on the contract of sale. The deposit bond is used in lieu of cash. You, the purchaser, are able to provide this guarantee to the vendor by paying a small premium to the insurance company.

+ Should I Be a Guarantor on a Family Member's Loan?

A Guarantor Loan, Family Pledge Loan, Limited Guarantee, or “Equity Guarantor” loan is one where the guarantor enables entry to the property market to a buyer by offering your own fully or partially-owned property as security. You are essentially co-borrowing without the financial commitment; should the borrower fail to meet their obligations you inherit the liability.

It is extremely important to understand your obligations if you choose to make your equity available to (usually) a family member for this kind of loan because it does restrict the freedoms you enjoy, such as the ability to easily refinance or sell your property.

You should refer to the FAQ that deals with the Guarantor Home Loan, and to fully understand the obligations of the borrower and the Guarantor.

+ How is the Home Loan Valuation Determined?

When you apply for a home loan your lender will get an independent valuer to assess the bank valuation of the property you wish to buy. For the bank, property valuation risks are their main priority, so the bank valuation is a conservative estimate of the property’s value and is different to a market valuation. The market valuation is generally higher than the bank valuation because a market valuation is driven by buyer behaviour, consumer confidence, and property demand, while the bank evaluation is orientated towards a risk assessment. The bank valuation assumes they may need to sell the property quickly to recover losses, thus it is on the lower side.

+ How is the Home Loan Valuation Determined?

When you apply for a home loan your lender will get an independent valuer to assess the bank valuation of the property you wish to buy. For the bank, property valuation risks are their main priority, so the bank valuation is a conservative estimate of the property’s value and is different to a market valuation. The market valuation is generally higher than the bank valuation because a market valuation is driven by buyer behaviour, consumer confidence, and property demand, while the bank evaluation is orientated towards a risk assessment. The bank valuation assumes they may need to sell the property quickly to recover losses, thus it is on the lower side.

+ What are Bridging Loans?

Selling your existing home and buying a new home simultaneously can be a little difficult in that the sale of your property, and finding a new property, rarely occur simultaneously. With a bridging loan, you can avoid the stress of matching up settlement dates, move quickly to buy your new home and give yourself more time to sell your existing property. This type of finance is also known as a ‘Relocation Loan’.

The primary purpose of a bridging loan is to “bridge” the finance gap so you can buy your new property before you find a buyer for your existing property, even if you already have a mortgage. It essentially creates a financial “bridge”, allowing homeowners to traverse the gap between buying and selling. The bridge normally lasts between six and twelve months, with higher rates charged if the property is not sold in the agreed time-frame. There are cases where a bank will get involved in the sale of your former property (not ideal).

The bridging loan is one that is taken in addition to your primary loan, meaning that you will be servicing your old property in addition to the new property, with the older property normally financed with a type of ‘Interest Only‘ loan.

+ Can I Write an Explanation Letter To The Banks Regarding Credit Defaults?

As listed on our FAQ on your Credit Score, a credit report may list overdue payments of any kind (by 14 days), unreliable or missed payments, or defaults. That report holds information on your profile as a credit risk and will impact upon your suitability for certain types of loans and rates.

The nature of those items listed on your credit score can be contested and removed, or in other cases, an explanation letter may be provided to a lender detailing the circumstances of the default.

+ How Does My Credit Score or File Affect My Home Loan?

Your credit score is your credit history converted to a number between 0 and 1000 or 0 and 1200, depending on which credit score provider produced the credit score. The higher the score, the better your credit rating. It is one of the factors used by lenders to determine how likely you are to repay the debt. In the case of phone and utility companies, it can even be a major factor in them determining whether to accept your application.

Australian Taxation Office SMSF Video Series

For information purposes only. Ensure you consult professional advice and guidance.


Thinking about an Self-Managed Super Fund?

Setting up a Self-Managed Super Fund

Self-Managed Super Fund Investments

Contributions and Payments

Administration and Wind Up