Newsletter No. 2
Hi from Angela!
Hi everyone and welcome to my second newsletter, bet you have been scouring your Inbox looking for it! The silly season is almost upon us so I thought it best to get this out before you came to a screaming halt in December; and the screaming halt date seems to get earlier every year.
Self Managed Super Fund (SMSF) and Limited Recourse Borrowers Arrangements (LRBA)
How much can you borrow?
- If your fund has a corporate trustee most banks will lend up to 80 per cent of the purchase price
- If your fund has an individual trustee some banks will only lend up 70 per cent
Each situation is different so you need to talk to your broker about what level of LVR is suitable for your circumstances. Other professionals that can assist with your SMSF are financial planners, accountants and lawyers.
You’ve got the loan – where does the income come from to service it?
Some scenarios for servicing the loan:
- Employee contributions if you are an employee (PAYG).
- Personal contributions you pay into the fund if you are self-employed – both these must be evident for two years. Your accountant can help with this. Also salary sacrifice amounts if evident over a two year period.
- Banks will be able to use 80 per cent of the rental income for any property purchased by the fund.
- Any other funds held within super – these are usually calculated at 3 percent per annum.
Always remember I’m here to help you
Drop me a line or give me a call – yes, I am repeating myself again! None of your questions are too small – 8824 4000, (M) 0414 608 970, email, email@example.com. Check out my podcasts on the website www.richmondresidential.com.au. I am having great feedback from clients about these and you may find your questions are addressed in those.
Did you know?
An offset account is not the same as having a line of credit loan? Some of the differences will make quite a difference to your outcome when investing.
Find these words: BROKER, CONTROL, CORPORATE, GEARING, INDIVIDUAL, INVESTMENT, LAWYER, LEVERAGE, MANAGE, PLANNER, TRUSTEE
Services we offer
- Financial Strategy
- Home Loans
- Property Investment
- Financial Planning (including insurance, retirement, superannuation and SMSF)
Wayne’s words of wisdom
You may or may not know but this year marks the amazing arrival of SMSF's as the largest sector in the Super fund industry – surpassing both industry and retail funds. When Paul Keating made the significant changes he did, he believed the self managed sector as being no more than 5% of the industry so why the growth? There are a number of factors.
Firstly, people like control; they want to be able to make decisions for themselves possibly driven by disenchantment with their existing fund.
Secondly, the ability to invest in property. Australians love investing in property. The average Australian is always interested in being able to invest directly in residential or commercial property.
Thirdly, not only can you buy property but you can borrow, using your super, to buy that property. Something retail funds or industry funds cannot match.
There are many other reasons but the key question asked is ‘Is it for me?’ If you have over $150k in super (individually or jointly with a spouse) it is worth a look.
If you have any questions by all means get in touch, firstname.lastname@example.org
Still on finance – but of a very different type
Some of you may be aware that I have been heading up a crowdfunding campaign which went live earlier in the week. The aim of the campaign is to raise funds to purchase a vehicle that can be modified to suit the needs of a young quadriplegic, Lincolne Innis, from Kellyville. Lincolne went surfing two years ago and returned to his family home 12 months later, not wind burnt or elated from a day at the beach, but in a wheelchair, unable to move from the neck down. Our aim is to get the best Christmas present ever for one of the most deserving people in Sydney. A few dollars from a thousand people will get Lincolne his ‘Lincmobile’ – and then I think we will have to find someone to hold him back! Full story here and I urge you to send the link out to you family, friends and colleagues. As the caring and giving community that we are, let’s make a difference together and enable Lincolne to get a life he deserves.
In our next issue we will be covering acceptable forms of income.