Tips for Getting an SMSF Loan in the Lending Crisis

01/12/2008

is now much harder to get a bank loan and the old laissez-faire attitude that has characterised loan applications during the recent financial boom won’t work any more.

Loans are still available for those who put up good quality applications.  So if you want to get a loan for an SMSF to purchase real estate take the time to ensure your application is put together well.

Here is a short checklist:

• present the application in as professional a manner as possible
• ensure all the information is comprehensive and accurate
• don’t ask for too much - the general LVRs for SMSFs are 62% for commercial property and 72% for residential
• the annual 9% contribution should cover the serviceability of the loan
• if you get your own valuation try to choose a valuer from the lender’s panel and make sure the valuation is transferable
• if the loan is rejected don’t think you can just go to another lender and present the same application – the loan mortgage insurer will know, so the better course is to fix the reasons for the rejection and re-submit it
• and don’t forget to ensure the fund’s documentation is all correct including the necessary power in the deed and the right investment strategy