Commercial lending institutions responded to the changes in the SIS Act (Superannuation Industry Supervision Act) in Sept 2009 and offered Mums and Dads access to loans for SMSF property investments.  This was an exciting time.  What quickly emerged was that the funds available had to be borrowed against a specific investment property right down to the address and that approval times were substantially slower than non SMSF property investment loan approvals.

 

Many developers were unable to hold stock waiting for a response when non SMSF property investors also wanted the property and could respond much more quickly.  This left SMSF property investors with limited choices as they were reliant on the good will of the developer or builder whilst they organised finance.

 

The GFC dried up many sources of funds for property investment borrowing especially for more specialist sources.  During this time the banks cost of funds increased and to balance this they moved toward lending to triple star rated property investors only.

 

More recently property investment funding has eased in Australia and SMSF loans are again being offered with LVRs of 72% or higher for residential and 65% for commercial property investments.  Personal guarantees have been endorsed by the Australian Taxation Office (ATO) as legal though good brokers, in many cases, are able to negotiate around this and seek to manage the banks perceived risk in other ways.

 

The biggest break through that we are excited about is that there are banks providing SMSF property investment loans that are preapproved.  They let you go out looking knowing your borrowing capacity, and the LVRs so you can do the calculations to work out what works for your circumstances!  Then once you have selected a property investment, the loan approval process is about four weeks, provided all information is provided.  This gives you the same property investment purchasing power of other investors.

 

This truly has opened the property investment market for SMSFs to be able to invest in their choice of property.