There’s hardly anyone that hasn’t heard of superannuation funds. The reason why SMSF is getting so popular is because it gives people the chance to become involved in the process of investing in their future while having the crucial role in its management. However, setting up an SMSF is a really important investment that takes a lot of prior knowledge on the subject. If you want to get the best outcome, you need to make sure you get a proper introduction to anything SMSF-related, from what is the whole purpose of the superannuation fund to how to set it up and how to get an SMSF loan.
This particular superannuation fund is highly encouraged by the Australian government and most importantly, it’s supported with tax benefits. It’s important to note that every SMSF member can choose between the two types of SMSF pensions: the account based pension and the transition to retirement. The account based pension gives you unlimited access to superannuation but the preservation age of 55 or older must be reached or the person must be 65 years old and retired. The transition to retirement pension on the other hand runs practically the same way as the account based one, the only difference is that you can’t withdraw lump sums. Also, the transition to retirement pension can start once the member has reached preservation age.
However, one of the fastest growing SMSF benefits are the SMSF loans. Using your SMSF to buy property gives you access to some of the best tax benefits for investing in property. The SMSF loan is a residential investment or a commercial property loan offered to anyone who wishes to invest their superannuation in property. For a property SMSF loan the interest rates are usually higher than the normal interest rates for residential home loans. Most banks and lenders process their SMSF loans from their commercial or business banking division and these parts of the banks offer higher costs than the normal home loan department, that’s why they charge more for their loans.
SMSF loans require a lot of documentation that needs to be carefully prepared and reviewed. However, standard commercial and residential loans offered by different banks and lenders can vary significantly and for SMSF loans there can be even larger differences in fees and interest rates. Some banks and lenders offer good deals on SMSF loans for residential properties, while others have good deals for commercial properties, so choosing your bank or your lender is an essential step for starting a successful SMSF loan.
