Forum Replies Created
Hi
Most lenders will not have a problem lending to a newly established trust as they will require you (and other adult beneficiaries) to guarantee/indemnify the borrowing.
With your property as collateral you should no problems.
Mike
Julie Ron wrote:Hi, we are about to sign a contract to purchase our first investment property through our SMSF. It's a one bedroom 58 square metres off the plan in Carlton Melbourne, for completion in 18 months. We still need to set up a bare trust to borrow 80% ..a bit scared… hope we are doing the right thing?! Any advice welcomed.
Regards RonHi
What name have you signed the contract in? The purchase needs to be in the name of the Bare Trustee which should have been established prior to the contract being signed.
TZ wrote:“An Australian Citigroup subsidiary, Citibank, has now started to facilitate loan transactions for Australians looking to purchase US property.” http://www.abc.net.au/pm/content/2012/s3480532.htm. This appears to be a new initiative. Perhaps contact Citigroup to see if they are planning to expand their services in the near future to include India, seeing we have so many Indian expats living in Australia?Have confirmed via Head of Mortgages for Citigroup here in Aust that …….sure they lend for o/s purchases you just need A$ income and Australian located security/property.
Put it in the facility with the highest interest rate. This will generally mean the LOC.
Hi
As long as you ensure that all Limited Recourse Borrowing Arrangement requirements are met and your investment strategy covering such an investment I can’t see why not.
Only real issue will be whether an overseas lender will understand the structure and legislative requirements including the Limited Recourse nature that the loan documentation must cover.
Get it wrong and your fund could be deemed non compliant and liable for penalties.
Hi
Sorry to say but no lender here will touch it.
cosmicstar wrote:Hi,My first post here and am not sure if the post should be here or not. So please pardon me if its at wrong place.
I have $60000 in my super right now and I wish yo buy a residential property overseas.
The cost of the property is approx $150k and I want to start a SMSF and maybe get a loan for the remaining amount.
Can someone please advise if I can do this ?? and what is the procedure ??
I contacted the big banks and they said they don't give a loan for property purchased overseas.
Please guide me. Thanks
TJ
Hi
Even if you find a lender (local/overseas) the borrowing will need to be done within the SIS Act Limited Recourse Borrowing Arrangement rules which requires that the property to be owned via a 'Bare Trust' structure.
Hi
CBA are not likely to do the deal as they have a minimum SMSF equity requirement of $250K-$300K. Also, as Richards says CBA fees & costs will be a killer.
Last time I read their info memorandum you also had to have the property professionally managed and use their security custodian. Both of these come with their own additional costs and in my opinion could be a major problem later on in circumstances.
If it was me I’d perhaps try NAB however give yourself plenty of time before signing anything and make sure your broker knows their stuff in the SMSF borrowing space.
Anthony K wrote:Hi Paullie & Mike
. It's not wise to exchange contracts until the SMSF has a Letter of Offer for the loan.
Anthony KTotally agree…….wasn't suggesting anything else. SMSF lenders are generally very slow to process/approve and as such I always recommend to my clients to obatin an approval before signing anything.
Paullie wrote:From the above information any offers need to be from PAULLIE CUSTODIAN Pty Ltd. This is correct yes?Yes, correct
Hi Richard
So they will lend $A against NZ security….as you say you learn something new every day of the week.
Cheers
tjtert wrote:Hi, I'm really a first time first timer, can anyone advise me if at all, is it possible to use one's Superannuation as a deposit for purchasing a property? And also, I do own some land in New Zealand and can I use that as a means to apply for a loan here in Australia? Please help.Simple answers are: Yes on the first point as long as it's an investment property, and on the 2nd question, no. If you want to borrow against NZ land you will need to approach a NZ based lender.
Terryw wrote:MikeSomething happened to your post – it appears to be nothing but a quote of the opening post.
TicTok wrote:My first post and I think this is the right forum but it could fit in a couple.I'm hoping there may be a few knowledgeable people here who can give me some pointers in the right direction and some advice.
- My wife and I are close to 40 yrs of age (me on the wrong side and her on the right side).
- We have only been in Australia about 8 yrs and my wife has been on mat leave for a few of those so our Superannuation is not huge, around $140k between us.
- We don't own property in Australia although we are both citizens.
- My wife works. I own a small business which has been operating from a home office.
- Next year I want to move the business in to some office space.
- I am thinking of combining our superannuation and starting a SMSF
- I would use the cash in the SMSF to purchase a commercial property for around $300-400k. Looking at offices/suites around 50-70m
- The property would be rented to my business at market rent
Specifically with regard to the financial side;
- It looks like a no-brainer. If I can take $150k, buy a property for $400k, have the majority of the mortgage paid by the tenant (me) and assuming a capital growth of 5% p.a. over the next 20 yrs then just over $1mil tax free. Leaving the $150k in the super and allowing an average 5% return I'd not even have the price I paid for the property. Am I missing something?
- Correct that capital gains are tax free whilst it remains within the SMSF?
- I understand that the start up costs are high relative to the amount of super we have but would the ability to leverage the cash outweigh this over the long term?
With regard to property purchase;
- Rent returns seem to be hugely variable dependent on location etc. I'm not too bothered about rent returns but more interested in capital growth over the next 20 years. Should I be concerned about yield %?
- I'm flexible where the business is based and am considering Melbourne CBD, South Melbourne, Melbourne Docklands, South Yarra. Any areas that are considered better or worse for long term growth? Advice on good areas for commercial property of the type we need would be appreciated.
- Any other advice with regard to fees, buying off the plan etc. would be appreciated.
Thanks in advance for any advice.
Hi
I use MLC which was competitive at the time when the policy was taken out.
Terryw wrote:But the fin planner is suggesting he contribute $450,000 in one year by bring forward 3 years of $150,000. However my mate is over 65 so I beleive the bring forward part is not available and he will be limited to $150,000 pa while still working and under 75. Excess constributions can have serious consequences. excess can be taxed at 46.5%! $300,000 x 46.5% = a lot.Hi Terry
I'm with you…the act clearly states that once your aged 65 or over (on 1st July) you cannot use the bring forward provisions, you can only contribute a maximum of $150,000 of non concessional contributions per year, and only if you satisfy the work test.
dw8998 wrote:Thanks terry, just sent you a PM as well.So after doing a bit more reading, steps include:
1) Getting a certificate IV in financial services which costs around $500
2) Obtain a credit licence
3) Find an aggregatorAm I missing anything from this list? Also how long should this entire process take?
Is it necessary to become MFAA approved as well as I only have 6 months of experience and it states on: http://www.mfaa.com.au/uploads/Membership%20Guide%20140811.pdf
that I need at least 2 years of experienceHi
Without MFAA (or FBAA) membership no aggregator or lender will accept you.
You will also need to have your own Professional Indemnity insurance as well as be a member of an external dispute resolution service such as COSL.
hansella wrote:Does anybody know if a SMSF fund can buy US property ?Sure, so long as your investment strategy covers it and the correct legal structure is established.
However the risks are many and this strategy is not for the in-experienced.
Steve65 wrote:I am looking to buy my first property with my SMSF. Assuming the property is paid off in 10 years,
will I then be able to subdivide the land ? If not, what flexibility do I have, could I sell it to myself ?
Thanks SteveI'm no expert on the SIS Act but if all debt had been repaid and the property transfered from the security custodian (bare trust) back to the SMSF then I can't see a problem so long as the fund uses its own money.
The only other thing that springs to mind is the fac t that a SMSF can not be seen to be running a development business.
Because of this perhaps it would be best that the fund outsource the development work (under a development management agreement) to a unrelated party so as to ensure that the SMSF is dealing with the land on an arms length basis as required by the SIS Act.
I'd be interested in other views.
tjunction wrote:With settlement due at the end of this week, the lender has just told me that they now also require the loan to be within a discretionary trust with a company as trustee.
I'm trying to determine if this is a deal breaker for a couple of mum/dad investors with one other IP.
Hi
Why the lender would try to give you this advise is extremely concerning. Are they qualified to give such "advice" I doubt it.
Were you originally looking to purchase in your own names or perhaps via a SMSF? I'm confussed.
