Clients of ESUPERFUND are permitted to invest in Australian Residential Property where the SMSF borrows to fund the Property Purchase. At this time borrowing to invest in Commercial Property is not permitted however a product is scheduled to be launched shortly to enable clients to borrow to invest in Commercial Property.
ESUPERFUND Clients are required to use the St George Residential Loan Product
To simplify the Loan Application process all clients of ESUPERFUND who wish to borrow to invest in Residential Property for their SMSF are required to use the St George SMSF Loan Product. This ensures that ESUPERFUND can continue to offer its annual compliance services at a cost significantly below market. If you elect to establish an SMSF Loan with another Lender then whilst your Deeed allows you to do this, ESUPERFUND will be unable to continue acting as tax agent for your Fund.
Loan Application Process
Once your SMSF has been established by ESUPERFUND and you wish to borrow to acquire Residential Property for your SMSF, you can apply for an SMSF Loan with ESUPERFUND. The process to apply for an SMSF Loan for your SMSF is detailed here.
Interest Rates and Fees
The St George SMSF Loan Interest Rate and Fees can be found here. While ESUPERFUND will constantly review the St George SMSF Loan Interest Rate and Fees and update our website accordingly, you should always confirm the Interest Rate and Fees by reviewing the St George website here or by contacting St George directly.
Security Custodian Trust
In order for a SMSF to borrow to acquire Property it must establish a Security Custodian Trust Structure. This Structure is typically referred to an Installment Warrant Bare Trust. When you apply for a St George SMSF Loan with ESUPERFUND we will arrange for the preparation of all the required documentation. We do note however that you will need to establish a company to act as trustee for the Security Custodian Trust if you do not already have one. Further information on this Structure can be found in our Loan Theory section here.
How to Complete Purchase Contract
The Property must be purchased in the name of the Security Custodian Company where you borrow to purchase Property with your SMSF. The following is noted:
- The Property must be purchased in the name of the Security Custodian Company.
- All Directors of the Security Custodian Company must sign the Purchase Contract.
- It is recommended that the Purchase Contract be signed "subject to finance".
- You must not put the name of your SMSF on the Purchase Contract.
Example:
If the Security Custodian Company Name is Smith Pty Ltd then the purchaser on your Purchase Contract will be: Smith Pty Ltd.
Neither the Trustees of your SMSF or the SMSF itself should be named on the Purchase Contract when borrowing to purchase Property in your SMSF.
Annual Compliance Fee
No additional fee is payable by clients who invest in Property with their SMSF, whether they borrow or not. Our annual fee remains fixed at $699 per annum. This is unprecedented in the marketplace who will charge additional fees upwards of $1,000 for clients who invest in property particularly with borrowings in a SMSF.
ESUPERFUND Setup Fees
ESUPERFUND attends to the entire setup process of your SMSF Property Purchase and Loan Establishment including:
- Providing a prepopulated Loan Application
- Establishing a Security Custodian Trust
- Arranging sign off that the Investment complies with your Investment Strategy
- Arranging legal advice on how the Security Custodian Trust operates
- Updating your Investment Strategy to ensure the Investment is allowed
- Updating your SMSF Trust Deed to ensure the Investment is allowed
- Liaising with the Lender to ensure the Loan is setup in accordance with Super Laws
This service is FREE. This is unprecedented in the marketplace who will charge setup fees of between $3,000 to $10,000 for the same service.
Property Types
At this time clients can only purchase Residential Property using the St George SMSF Loan Product. Clients cannot borrow to acquire Commercial Property, Vacant Land or borrow for a construction loan. Whilst at this time borrowing to invest in Commercial Property is not permitted, a product is scheduled to be launched shortly to enable clients to borrow to invest in Commercial Property
Maximum Loan to Value Ratio (LVR)
The current Maximum Loan to Value Ratio on the St George SMSF Loan Product is 72%. Lenders Mortgage Insurance is not payable.
Maximum Loan Amount
The Maximum Loan Amount on the St George SMSF Loan Product is $500,000. If a higher loan is required please contact ESUPERFUND directly.
Accessing Information by ESUPERFUND
Data for SMSF Loans processed through St George will be electronically accessible by ESUPERFUND alleviating you of the responsibility of maintaining these records at financial year end.
Avoid Audit Issues
ESUPERFUND is involved in the entire SMSF Loan Setup Process, ensuring that ALL client SMSF Loans are correctly established. This ensures ATO compliance issues and associated penalties are eliminated and that client SMSF Loans are compliant with Super Regulations.
Product Disclosure Statement
The Product Disclosure Statement for the St George SMSF Loan should be carefully reviewed prior to applying for a SMSF Loan. The relevant Product Disclosure Statements can be found here.
No Loan Advice Provided
ESUPERFUND (whether directly or via associated entities) is an execution only Loan Service. That is based on a review of the SMSF Loan Products available you are satisfied that the St George SMSF Loan is appropriate for your Fund. By applying for a St George SMSF Loan we will assist you to obtain an approval for that selected Loan and attend to all associated paperwork. At no time can ESUPERFUND recommend that the St George SMSF Loan is the appropriate Loan for your SMSF needs, objectives or circumstances.