When you're growing your wealth, you want to make your money work for you and not the other way around. With that being said, the best way to do this is by focusing on building your investments.
Nowadays, some people are obtaining investment properties through their self-managed super funds; however, there are many things to consider. Because of this, many work with lending specialists to see if this is an ideal option for them.
If you're curious to learn more about SMSF and if it's the best way to get funding for your property investment, read on. In this article, we'll dig deeper into self-managed super funds and property investments. Let's take a look!
Superannuation and Investment Properties: What Should I Know?
If you've decided that a self-managed super fund is the right funding option for you, the next question you need to ask yourself is where you should start investing. And of course, you're here because you're interested in investing in a property. Thankfully, there are two ways you can go about this.
You may be able to obtain property without borrowing money if you have sufficient funds in your SMSF. However, your property should be part of an investment strategy that will help fund your retirement. Or in some cases, your SMSF should be able to take out a loan that will help you buy a property.
Loans that you take out through your self-managed super funds are called "limited recourse." This means that if your fund defaults, you can't sell other assets in your SMSF to pay back the loan, making it a bit riskier for lenders. Because of this, SMSF loans may have a higher interest rate and more fees than common investment loans.
Fortunately, some lenders don't offer SMSFs non-recourse loans. All you need to do is find a lending specialist who will help you get a loan that fits your investment strategy.
How Do I Buy a Property with a Self-Managed Super Fund?
Of course, there are many things to consider when it comes to investing in properties using your SMSF. You need to know how much you can borrow and your loan-to-value ratio. With this in mind, you'll get to figure out how much funding you'll need to cover a deposit or upfront purchase cost.
Another thing you'll need to consider is if you have enough cash flow and, on top of that, if you'll make a profit with the property you'll buy. Usually, SMSFs pay 15% tax on net income, which is perfect if your property will profit; however, you can transfer those to your personal income to save on tax if it generates a loss.
The Bottom Line: Work with a Lending Specialist to Help You Create the Right Investment Strategy for Your Big Purchase
Seeing as there are a plethora of things to consider, it's only right that you work with a mortgage lender who understands your situation and provides you with deals that best fit your self-managed super fund strategy. With the help of professionals, you'll get to obtain the home of your dreams with ease and less hassle.
How Can We Help You?
Do you want to learn more about self-managed super funds and how they can help you achieve your retirement plan? We're here to help!
Wealthy You is one of the leading mortgage companies in Sydney, offering various mortgage solutions that meet every clients' needs. Since we're alternative lending specialists, we provide restructuring loans in Sydney that make refinancing your home simple.
Learn more about our services today!