The Homework Blog

New Changes For SMSF Loans

In Australia, there is a new change going on that is a huge benefit for many people.  Years ago, the Australian government was concerned that the there would be a huge shift in the workforce and a lot of people would be retiring at the same time.  Because of that fear, the government instated a program that is similar to the 401(k) program in the United States.  An employer makes contributions to a super fund based on a percentage of the employees yearly earnings.  The money will accrue in a privately managed fund until the employee reaches a certain age.  Instead of the entire fund being managed by a company, it is typically managed by a trustee for the benefit of the employee and his or her partner.  But there have been some new additions, primarily being the introduction of smsf loans. 

This new introduction is a huge change because now people are able to borrow money from their funds to purchase property and real estate with it.  It was just a recent change the goverment made to the rules in which your manager can request a loan but only on the condition that the lender cannot take anything other than the home if you do not pay.  Basically, in the event that you cannot pay the loan back, the lender would have no rights to anything else in the fund, the lender would only be able to take the house that is on the mortgage.

When getting ready to apply for self manager super loans, there are a few things that you will need.  First you will need to know what the purchase price of the property is, exact location, or postcode.  You will also need to know what the expected rental income will be and it would be extremely helpful if you could find out what the depreciation of the property will be.  Not only will you need this information to apply for smsf loans, but it will also help you decided if this is really a good investment.  This is not the only information you need, but it will get you started.  Another thing to remember is that since there is a lot of information to go through, it will take a lot more time than a regular mortgage.