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The Trusted Partner to SMSF Professionals. Click Here for details

SMSF Loans routinely achieves structural, time-frame, or 'pricing' outcomes superior to those offered by a direct approach to lenders

SMSF Loans provides SMSF Trustees with control, convenience and cost effective services that are transparent and either independently offered or bolted together for a total end to end solution.

Purchasing a property within your SMSF

There are 4 streams of process steps – outlined below.

Many of these can (and should) take place concurrently to prevent delays.

It is important to note that taking appropriate advice up-front and requesting an indicative loan approval as early as possible will greatly reduce both time frames and stress levels later in the process.

Likely time frames are provided where applicable – but should be taken as a guide only.

Overall target time-lines, from commencement of advice to settlement of the property transaction, are 60 days for newly created SMSF and 30 days for existing SMSF.

For information on our Service Models and how we can assist you please CLICK HERE.

Advice	Loan	Documents	Property
Accountant / Financial Planner	SMSF Loans	Your provider (or SMSF Loans)	Investment Property Specialist
Is an SMSF right for you?
	Discuss your plans and borrowing capacity – obtain an initial assessment
Already have an SMSF?		Review existing SMSF Trust Deed – can it borrow?
Who will provide Statement of Advice for establishment of SMSF and/or leveraging into property?	All prudent lenders will require financial and/or taxation advice. N.B. SMSF Loans cannot provide this advice but can refer you if required	Establish new SMSF Trust. Incorporate trustee. Arrange ABN & TFN (ABN takes up to 30 days)
Who will provide accountancy/audit?	Obtain indicative approval (1 week)	Open bank a/c for SMSF	Start property search
Complete rollover of existing funds (allow 4 weeks).			Negotiate property purchase
		Establish security trustee Pre-position trust (3 days)
			Obtain Contract of Sale (Must be in name of Security Trustee)
Appoint solicitor or conveyancer	Obtain formal loan approval (2 weeks)
Arrange property insurances			Exchange contracts
	Execute loan documents
			Settlement of purchase (4-6 weeks from exchange)

Typical Loan approval to Settlement

1. Obtain an Indicative Finance Approval

Unfortunately many lenders will insist that you go to the expense of establishing all of your SMSF Trust and Bare Trust structures prior to them giving you a loan approval.

However, most lenders have differing requirements of the structures or Trust Deeds to be established. Thus, should the first lender selected not approve the loan or not offer terms that are acceptable you are very likely to need to change something in your structure for the next lender. This is not only time-consuming and frustrating, it creates unnecessary expense.

Thankfully, SMSF Loans has negotiated with all lenders to allow our clients to receive an Indicative Approval prior to going to any unnecessary expense. This is true even for those lenders who won’t do this for their own customers.

We strongly urge you to take advantage of our ‘bargaining strength’ in this area and save yourself time, money and the run around.

CLICK Here - to commence your finance approval

2. Establish / review the SMSF

The Trust Deed establishing the SMSF must:

Comply with the requirements of the Superannuation Industry Supervision Act 1993 (SIS Act) (including the "sole purpose test - see section 62 of the SIS Act which requires that regulated superannuation funds are obtained solely for the provision of retirement benefits to members).

Allow the Superannuation Fund Trustee to ensure that investment in real property is in line with the SMSF's overall investment strategy (note that superannuation funds must have a written investment strategy), and the proposed purchase complies with all other requirements of the SIS Act (including but not limited to the "in-house asset rules" and the restrictions on acquiring assets from "related parties").

Click Here - Trust Documentation Page

3. Establish the Security Trustee and Prepare to Establish the Security Trust Deed

The Security Trust Deed is a key document. Care is required to ensure there are no adverse GST, taxation or stamp duty consequences. It is important that the SMSF Trustee itself is not the Security Trustee. Such an arrangement may breach the requirements of section 67(A) of the SIS Act and result in the SMSF being non-compliant. It is also undesirable for an individual member of the SMSF to act as Security Trustee due to trust law issues regarding the merger of the interests of the trustee and the beneficiary.

The Bare Trust (Security Trust) cannot be established prior to the identification of the security property to be purchased, but everything else can be in readiness so that the process keeps moving once the property is selected.

Click Here - Trust Documentation Page

4. Find the Property

If not already selected or, as is permissible in the case of commercial property, already held by a related entity it is time to select a property to purchase. Offer and acceptance should be finalised such that the Bare Trust can be finally established prior to contracts being entered into.

There are considerations for sourcing investment property, and especially that to be held in a SMSF, that are different to finding a home to live in.

Click Here - Property Selection

5. Instructions to Solicitors / Conveyancers

Accountants and Advisors should ensure that the lawyer / conveyancer acting for the SMSF on the purchase of the property understands that the property must be purchased in the name of the Security Trustee. This is an essential part of the structure - the SMSF cannot be the registered proprietor

6. Obtain Formal Loan Approval

The Trust Deeds for the SMSF Trust and Bare Trust must be reviewed by the lenders legal department. A valuation will be conducted on the security property and, where it is a purchase, a signed copy of the Contract of Sale will need to be provided.

These, and any other requirements, will have already been provided to you in the SMSF Loans Indicative Approval Letter (at Step 1).

Your SMSF Loans Consultant will assist you at every stage and liaise with the lender, your solicitor or conveyancer and other advisers.

Click Here - to commence your Finance Approval

7. Contracts Exchanged

When contracts are exchanged between the seller as Vendor and the Security Trustee as Purchaser, the deposit will be paid by the SMSF. There is no need for the deposit to be paid through the Security Trustee.

8. Loan Documents Issued

The lender's lawyers will prepare the loan documents in the ordinary way and send them to the SMSF's lawyer / conveyancer for signing and return. In most cases the SMSF borrowing structure uses normal loan and mortgage documents with special provisions to provide the limited recourse against the asset.

9. Settlement

The purchase is completed. After registration of the transfer on the mortgage, the transaction / title documents will be held on behalf of the lender.