Until recently, restrictions would not allow self managed super funds to purchase real estate in Australia. Now, it is possible for a person to purchase a property in Australia using their superannuation and utilise the tax benefits and other features of the home loan.

Home loans for a self managed super fund (SMSF) can be complex and it is recommended that you speak with a mortgage planner to help you research the various mortgage loans available to find the best home loan product that suits your needs.

Legislation changes in September 2007 to the Superannuation Industry Supervision Act (SIS ACT) now allows super funds to borrow to invest in direct property or shares, subject to certain strict conditions.

How does it work
Your self managed super fund (SMSF) wants to buy property (either residential, commercial or rural) but it does not have enough funds for the full purchase. Your SMSF can make an equity contribution on the property and the remainder of the funds can be borrowed from a mortgage lender to complete the purchase.

Some advantages of using a SMSF to purchase property in Australia include:

• Greater investment choice available
• Your SMSF can acquire property worth more than its available funds through the benefits of gearing
• You have control over investment strategies
• You can invest in direct residential and commercial property
• Gain access to investment gearing opportunities
• Can be used for efficient estate planning
• Ability to own your business' real property (but not operating assets) in the super fund
• Maximum 10% capital gains tax is payable on any capital gain if the property is sold after a minimum of 12 months and no capital gains tax is payable if sold during pension phase
• Maximum 15% income tax on rental income
• Your assets are secure as the mortgage lender does not have recourse to your SMSF 's other assets in the event of default
• Income from the property can help pay off the mortgage loan
• Interest expenses may be claimed as tax deductions by the SMSF which can potentially reduce your SMSF's tax liability

Features of SMSF loans
• The self managed super fund must purchase the property from an unrelated party - arms length
  
• Investing in property must be consistent with your SMSF investment strategy
• The property is held in trust for the SMSF, which is entitled to its income
• In the event of a loan default, the mortgage lender only has recourse to the security property. It cannot make claim to any other SMSF assets
• Your SMSF makes the loan repayments. After the home loan is repaid, legal ownership of the property is transferred to the SMSF
• Your SMSF can purchase any kind of property, for example, retail, commercial, retail or rural
• SMSF's can deal with the property in the same way that a normal property investor would deal with their property, for example, lease it out, renovate, repair or sell the property. However, this is subject to the terms and conditions of the relevant home loan or mortgage
• The SMSF can pay out or reduce the mortgage loan at any time (subject to the terms and conditions of the home loan or mortgage)
• All rent is paid directly to the SMSF. Loan repayments are made in the usual way from the SMSF to the mortgage lender
• When the home loan is paid out in full, title to the property can be transferred to the SMSF or the property
  

There are many complex laws restricting the use of SMSF's to borrow money which you need to understand prior to committing to any loan product. We strongly recommend that you speak to a qualified financial consultant first before implementing any strategy, as they will be able to help you better understand and abide by these laws and also to advise you whether this is an appropriate solution based on your needs and circumstances.

Not all SMSF loans are created equally, so how do you know which one is right for you? One of our mortgage brokers can help you do all the research and legwork for you, saving you time, stress and money.

Today, more people are self employed or employed on contract. In fact, the self employed sector of the community is growing substantially each year. Contractors and the self-employed simply don't have the same financial structure or income patterns as PAYG earners, meaning you need the flexibility and convenience of our lo doc home loans.

The greatest benefit to these types of loans is they provide non-traditional income earners, with an irregular inflow of money, the opportunity to easily get into the home ownership market, or to take out a loan to upgrade. Also, some mortgage lenders offer Lo Doc Loans to investors and PAYG earners as well as providing self employed loans.

As with any loan with this degree of trust and flexibility, there are downsides which you will need to weigh up. Interest rates and fees are higher with low doc home loans meaning your repayments will be slightly higher. As the interest rate structure does fluctuate from time to time in Australia you need to be sure your income will support these fluctuations, or you may need to consider totally fixed interest rate mortgages so you always know what your repayments will be.

Because the very nature of your employment choice means there can be significant fluctuations in your income, there is a real risk of over-committing yourself should your income drop for a prolonged period of time, and you don't have adequate financial back up in place.

Naturally, the consultants at AFD are happy to discuss these aspects with you, however, we recommend you also seek independent advice before taking on a lo doc loan or any financial commitment.

Yes, you pay a little bit more in interest and fees, but lo doc home loans save you a lot of time and stress. For more information please contact an AFD consultant.

Individuals have a range of personal car finance and personal car loan options available to them, the choice of which will depend on how often you use your vehicle for business, whether your employer offers you salary packaging and the type of car you want to buy.

AFD specialise in car finance for individuals - we have the right solution for your needs.


Personal car finance options

Commercial Hire Purchase (CHP)
Commercial Hire Purchase is a flexible finance option that suits some individual borrowers who use their vehicle for business purposes.

Novated Lease (Salary Packaging)
Novated Lease is a method of salary packaging a car.