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Writing self-managed super fund (SMSF) loans can be risky, with brokers having to meet specific compliance requirements under NCCP. This month we ask...
Are mortgage brokers qualified to write SMSF loans?
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If you only do one [SMSF loan] every now and then, it’s hard to keep up with compliance. I’ve only written a handful over my time, and although they’re not difficult, forgetting to cross your Ts and dot your Is is risky. I still needed to double check that everything was done correctly with St George Bank, who were a great help. I would support having an SMSF course similar to the anti-money laundering one. Ultimately though, brokers who fail to keep their instruments sharp should get out of the kitchen.
Laurie Parkes
FrontRunner Mortgage Group
I believe brokers are qualified to write SMSF loans. It is a growing area that all brokers must become familiar with. The tax advantages, such as just 10 per cent capital gains tax and 15 per cent tax on rental income make SMSFs really fantastic. With perks such as no tax payable when the fund goes into pension phase, I personally think this area of business will do nothing but grow, and with so many tax advantages the SMSF product is not only great for my client but it also sells itself.
Richard Pusey
Switch Now Home Loans
Whilst brokers are ‘in theory’ qualified to write SMSF loans, many choose not to. Obtaining a loan and buying a property inside a self-managed super fund differs substantially from purchasing a property outside of superannuation and costly mistakes can be made if the broker lacks experience. There are additional documentary requirements to establish the structure required for an SMSF loan that many brokers just aren’t familiar with, making these loans very time consuming. Lenders’ products, policies, fees and interest rates also differ substantially.
Mardee Thomas
1st Street Home Loans
In the majority of cases, yes, [brokers are qualified]. So long as the accountants and planners are providing the clients the right advice with regards to the structure and set-up, then there are no problems at all. In fact, brokers are better positioned to handle that business than accountants and financial planners, who are not as good at putting together loan documentation. So it’s a good combination for a broker to be doing the loans with the right planners and accountants.
Mark Haron
Connective
As it’s a relatively new area of lending, and one that is quite specialised, we strongly recommend to our members that they take advantage of some of the excellent training sessions that most of the lenders in this sector can provide. There are quite a few traps for brokers who are new to SMSF lending and it is important to understand what these are. Without this further training we would not recommend brokers undertake this type of loan.
Mark Hewitt
AFG
