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A Self-Managed Super Fund (SMSF) is a superannuation fund designed for members (trustees) to have direct control over their retirement savings and investments. It is an investment portfolio that differs from a normal super fund as the trustees decide how the fund operates and how to invest.
The majority of lenders will not lend to super funds for investment properties because the lender has no recourse in the event that there is a default on the loan. Therefore, most lenders require a minimum deposit of 20-25% and some lenders also require personal guarantees from the members of the superannuation fund.
For new trusts, some lenders will look at the current income of the trust beneficiaries, the previous super contributions they have been making and their proposed new super contributions.
The SMSF loan can be assessed based on your proposed super contributions if they are within the maximum amounts allowed by the ATO and if you can afford these contributions without hardship.
If you are close to retirement age, then the lender may not accept your super contributions in their assessment. The lender may shorten the loan term or reduce the amount of the loan so that the rental income can cover the repayments.
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