Self Managed Super Fund Loans
As there are many laws that restrict the use of SMSFs to borrow money, it is critical that you understand not only when an SMSF is allowed to borrow money but also the structure, costs and ongoing legal requirements as part of having an SMSF.
What is an SMSF ?
A Self Managed Super Fund (SMSF) is a superannuation trust structure that provides benefits to its members upon retirement. Where it differs from a normal super fund is that while your employers' contributions can still get paid into the fund, the trustee (either a company or yourself) has direct control over the assets that the fund invests in.
With close to 600,000 SMSFs in operation in Australia (as at 30 June 2017), determining whether to start an SMSF should be discussed with a professional financial adviser before embarking on creating a fund.
What to Consider
As everyone’s lives are individual, their respective risk profiles, investment and retirement goals differ dramatically. Based on these factors, an SMSF can be a flexible wealth creation tool for retirement, providing flexibility to control your investment decisions and support your retirement objectives.
Australian investors choosing SMSFs prefer the wider range of investment options, greater control over assets, flexibility to change investments e.g. buying property within an SMSF, and greater visibility of how investments are tracking.
There are many restrictions on SMSF loans, ranging from the type of properties you can purchase, the lower LVR (Loan Value Ratio), higher interest rates and trust structures requirements. Ensure you work with an Accredited Broker first to explain your plans and have them manage the process for you.