SMSFs will no longer be able to borrow for residential property but they can still borrow for other types of assets. The changes are aimed at simplifying the SMSF loan rules and ensuring they are consistent with those in the mainstream.
This change will make it harder for members of a SMSF to get loans, as residential property is no longer an option. In order to get a loan, they will have to look elsewhere – such as property investment trusts, term deposits or shares in listed companies.
SMSFs are still a smart option for many
SMSFs are a popular form of retirement savings for Australians, and many retirees rely on these funds to supplement their income.
SMSFs are an attractive option for Australian retirees because unlike other retirement options, they offer complete control over the investment strategy. SMSFs invest in assets such as shares, property, and managed funds. Retirement investors also have the option to tailor their fund to suit their individual needs as well as their risk appetite.
How does SMSF borrowing work?
This is a good option for those who are looking for ways to invest in property and other assets, but do not have the financial capacity or collateral to do so.
A mortgage is a type of loan that you can take out to purchase an asset. With a mortgage, the borrower (you) agrees to let the lender (the bank) keep your money or property as collateral until you pay back the loan with interest. In exchange, you get to use and enjoy your asset while it is in your possession.
You can get in touch with one of our SMSF Loan Experts at any time to discuss your options for Lending. Visit our website, Text, call or email and we will be happy to help.