Hi Everyone,
I am seeking finance for a house and land package to be purchased within a SMSF.
I am interested in hearing any advice or experiences from anyone who has done this before?
I have a contract on the land subject to finance and am in the process of finalising the building contract. I origninally discussed purchasing a property through our SMSF with our banking manager at CBA who gave me all the information about set ups, rates, fees, etc and then told me to go ahead and find the property and we would go from there. I thought all would be fine, went out and found the house and land package we wanted, signed the land contract and duly forwarded it to the bank.
Then the banking manager calls to say he is sorry, but CBA do not lend for 'building' through SMSFs, only for 'existing' dwellings. Sigh. It would have been nice if he had mentioned this small thing before, though I suppose I am partly to blame for not mentioning specifically that we wanted to buy a house and land package and build.
I am sure there are other banks out there that will lend for house and land packages and I will be contacting a couple of finance brokers to see what sort of finance is available. Of course now the clock is ticking on the contract as I had thought the finance was all planned before going looking for the property.
If anyone has any advise or experiences that they think might be useful I am happy to hear from you.
Regards,
NatashaHI Natasha
I am not aware of any lender that will on a construction basis to a SMSF.
Admitedly i have only done maybe a dozen SMSF deals since 2007 when the legislation changed but not aware of any lender.
Wasnt sure if you rang me earlier but if so do tell me have i answered your question.
Richard Taylor | Australia's leading private lender
Hi Richard,
Yes, I did call you, and yes, I guess you have answered the question of whether you can help with this particular situation, thank you. I have briefly talked with another broker who says that there are some lenders that will do construction loans for SMSFs, but that is all they have said so far, and are going to contact me next week to discuss.
So no need to call me back tomorrow, though I may get back to you for a chat later anyway as I might be looking for a broker to start to move some of my new loans away from the single bank I am with now.
Thanks for your reply,
Regards,
NatashaNo problems Natasha.
My apologies the message only came thru late this evening.
Feel free to call me in the office should you feel we can help further.
Richard Taylor | Australia's leading private lender
Hi Natasha,
It seems you already have the answer, but just confirming that NAB will not lend under a SMSF for construction either.
Hi Natasha,
just a quick FYI, you will likely find there may be some restriciton on specific loan product types for SMSF lending, depending on the bank, and likely be additional costs also – such as legal costs etc charged by the lender to various docs from your fund 'perused' by their legal area. LVR's are also not as high, but of course it all depneds what you have in mind. Naturally this means a quick settlement is not always possible unless you have everything in order first. All the best.
Hi Natasha
Like Richard has said, there are no SMSF lenders that will do construction. Depending on how much cash your & your fund have one possible way is to fund the contruction yourself using available cash and have the SMSF borrow for the land.
Another problem you may face is now that you have signed a contract. What name did you purchase it in?
Reason for the above question is that if you are to purchase the property via a SMSF borrowing then it must be held via a "Bare Trust" arrangement with a corporate trustee and this trustee must have been incorporated before contracts are exchanged.
Hey Natasha
I read your above information with interest, I too am looking to purchase a house and land package within my SMSF and so far have not found anyone that will do the construction lending. Just wondering how you got on with this? Did you find a lender or a broker that might be able to help me out.
Any informatin would be appreciated.
Cheers
Joe EvansHi Joe
Not a matter of finding a lender / broker to assist you it just cant be done.
Option is to fund it personally but other than that get the builder to fund it and you purchase it as a completed product.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Guys,
The only way this can be done is if the developer/builder issue a COS on the completed property or combined house land package full purchase amount all on one contract so the construction element is taken away from the scenario. The developer/builder will then have to construct the property off their own backs so meet the bank regulations.
We have done a couple this way and it has worked don't be surprised if the up the price a little because of it.
Regards,
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