A few key considerations when looking into a potential refinance of your SMSF loan
Hello smsf trustees and welcome to our channel today we’re going to have a chat about smsf refinancies which is a pretty hot topic at the moment so thank you for joining us it will potentially improve your retirement incomes substantially if you are currently paying too much on your smsf loans so well done well done on researching the matter and looking at your
Options this is fantastic today we’re going to tackle a few key topics about smsf free finances and we’re going to look at equity release we’re going to get cost we’re going to look at what the lenders are currently looking for what their appetite is and and how quickly things can be done so let’s kick off straight um without wasting too much time first thing
I want to talk about which comes up all the time is equity release so if you have a property in your smsf and you have a mortgage and you have a lot of equity in the property can we release some of that equity for example for the smsf to purchase another property and unfortunately consistently the answer is no that’s a compliance issue it’s not a lending issue
So lenders would be quite happy to lend that money to your smsf and release the equity unfortunately from a compliance perspective that’s not possible so even if you’ve got a 10 loan you’ve got a million dollar property you’re only 100 000 on that property you want to refinance which is understandable and you want to release some equity to purchase the next
Property we can’t facilitate that so that’s uh no no that’s a very common request we receive and we can’t assist with that short of making yourself made super fun non-compliant that’s not great news but we’re gonna come to some more exciting stuff in a second more exciting smsf refinance all right um the one of course so let’s stay with the the stingy topics um
The cost so as you would have experienced when you set up your smsf loan in the first place um these loans tend to cost a bit more to set up and unfortunately that will be repeated to an extent with the refinance so we’re still gonna have lenders that will want to double check the deed for your self-managed super fund and for the bear trust that usually is done
By an external party and they will pass on that cost to your smsf so that translates into one-off costs for refinances anywhere between one thousand to three thousand dollars depending on the lender the smsf and the nature of the lending whether it’s residential or commercial because you also need to do a valuation and you’ve got those legal costs we discussed
And then the lenders tend to have some um application fees etc um what that means is that unless there is a sizable discrepancy in the right between the rate that your smsf is currently paying and the rate that your smsf is looking at getting through the refinance it’s probably not worth looking at so if we were looking at your mortgage in your personal capacity
And you’re currently with cba and you’re paying 3.5 and you can get a deal with anz at 3.1 because the costs are so low you would go yep that’s fine i’m i’m going to do it um within smsf we generally look at sort of discrepancies in the you know 0.6 0.7 depending on the loan amount obviously but we we look for bigger discrepancies to make sure that it is in
The self-made super fund best interest to do the refinance so you don’t refinance for a small rate discrepancy you only go if there’s substantial savings to be to be had which leads us to where do we get those substantial discrepancies and what are lenders looking for what is their appetite at present the biggest thing that lenders are sensitive about when it
Comes to smsf lending is loan to value ratio so the lower the loan to value ratio and the best chance to actually secure a big saving for the smsf so if you’ve got a loan which has been in place for two years plus and we can show the lender that you’ve been behaving on that loan for that period of time and there’s a low loan to value ratio which usually is
65 60 or less we’re going to be able to arouse the appetite of the lender and say well this is a very safe loan you’ve got a big big buffer in there you’ve got a good history of the property being leased of the repayments being made give us a deal we find that for those deals we we get we get deals that are very attractive um and and definitely justify going
Through the process of the refinance so that’s the sweet spot that applies to both commercial and residential lenders loan to value ratio and history are currently the two ingredients that we really really translate into lower rates last um we’re gonna touch on the the turnaround time so how long does it take from the word go to enjoying your lower rate depends
On the lender unfortunately but broadly speaking you would think that months two months and a half is is a really sick time frame um in order to get one such application through the whole process right up to settlement so that’s that’s what you would be looking at it’s not particularly exciting probably neither is this video but it is important it is important
Because if you’re looking at saving three four five thousand dollars a year in interest um over a period of 10 15 20 years it will make a massive difference to the the balance of your superannuation at the time of retirement it’s not just the interest you’re saving you’ve got to remember it’s compelling so that money not only are you not saving it but you also
Get to invest it whether you pay off the loan faster whether you invested in something else it gives you more options and it certainly certainly boosts your retirement balance substantially so you can have the right property um you can have the right tenants you can be doing everything right but if we can save you 0.6.7.8 on your self-managed super loan it will
Eventually materialize into something real which will be money you can spend in retirement and a lot of it potentially so thank you for taking the time um well done whether you proceed or not it’s great that you’re looking into this and assess the situation for yourself made super fun and yeah if you want to discuss further feel free to contact us if if not all
The very best either way cheers bye
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SMSF Refinance By SMSF Loan Experts
