When it comes to our finances most people would like to make decisions regarding where and how they invest, especially when it involves their retirement. In saying that, building assets in your superannuation fund is not limited to being at retirement age. It is also available for younger investors.
Provided the paperwork within your SMSF has been set up correctly you will be able to invest in property as well as other assets.
Can you borrow using your SMSF?
Yes! This lending is called LRBA (Limited Recourse Borrowers Arrangements). There are of course rules around how this borrowing is done. Property and investment types will determine what Loan to Value Ratio (LVR) you will be able to borrow using your SMSF. The maximum borrowing is 80% of the purchase price of a property. However, some borrowings can be as low as 60% LVR.
How much can I borrow in my SMSF?
As an SMSF is a separate legal entity to yourself, it is not actually you that borrows the funds for purchasing assets. You also do not own the assets of the SMSF. You will, however, have multiple roles within the SMSF. These include trustee, director, beneficiary and guarantor.
The structure of your SMSF is very important. Without the correct structure you may limit your ability to purchase different assets within your SMSF.
As always, surrounding yourself with professionals such as financial planners, accountants, lawyers and an experienced mortgage broker accredited to write Limited Recourse lending loans, will make your journey into the SMSF world a lot easier.
If you are interested in learning more about an SMSF and the difference it can make to your retirement, book a free 45 minute consultation and we can have a conversation regarding your specific financial situation.