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What is a Self-Managed Superannuation Fund (SMSF)?

It is a type of superannuation fund in Australia that allows individuals to take direct control and responsibility for managing their retirement savings.

In Australia, SMSFs are allowed to borrow money to acquire certain types of assets, commonly referred to as limited recourse borrowing arrangements (LRBAs).

Non-bank lenders provide SMSF loans; Major banks don't provide this type of loans.

For a standard home loan, there are only small differences among different lenders. However, for an SMSF loan, there are big differences in fees and interest rates.

What can you buy in SMSF?

1. Residential investment property (not lived in by fund members).

2. Commercial property (including business premises).

How much deposit is required?

Ideally, 20–30% deposit plus associated costs (stamp duty, legal, etc.) is required.

What to consider before setting up an SMSF?

1. Cost and Fees: SMSFs can involve higher costs compared to other types of superannuation funds. Consider the setup costs, ongoing administration fees, investment costs, audit fees, and any additional expenses associated with running the SMSF. 
2. Legal and Compliance Responsibilities: SMSFs are subject to strict regulatory and compliance requirements set by the Australian Taxation Office (ATO). It is important to understand and comply with these rules to avoid penalties and maintain the fund's compliance status. Be prepared to keep detailed records, complete annual audits, and meet reporting obligations.
3. Insurance and Protection: Assess your insurance needs within an SMSF. Consider whether the insurance coverage provided through an SMSF aligns with your requirements for life insurance, total and permanent disability (TPD) insurance, and income protection insurance.
4. Professional Advice: Seeking professional advice from qualified financial advisors, accountants, and SMSF specialists is crucial before establishing an SMSF. They can provide guidance on the suitability of an SMSF for your specific circumstances and help you navigate the legal, financial, and compliance aspects involved.

To ensure that you are complying with all of the regulations, speak to a tax agent who can offer you specialist taxation and financial advice before proceeding ahead with SMSF.

Why use Mortgage broker for SMSF loans?

An SMSF loan is a complex loan unlike standard home loans. Therefore, it requires a special expertise while structuring an SMSF loan. You don't have access to lenders, as the major banks don't do SMSF loan.

At Mortgage Next, we’re here to ensure your loan structure works for your future, not against it.

👉 Call Ankur Mathur on 0424 203 363 or email ankur@mortgagenext.com.au to book your consultation.