Buying a property in the name of your Self Managed Super Fund (SMSF)

Buying a property in the name of your Self Managed Super Fund (SMSF)

Buying a property in the name of your Self Managed Super Fund (SMSF)   I find that Self Managed Super Funds (SMSFs) are getting very popular and more people are buying properties in the name of their SMSFs. However when buying a property in the name of the SMSF there are a few points to consider. You have to first decide whether you are going to fund the purchase with funds from your SMSF or whether you are intending to borrow to finance the purchase. The banks refer to this as limited recourse lending and they stipulate certain conditions that have to be met before they will agree to fund a purchase through a SMSF. It is advisable that you have a corporate trustee as the trustee of the Superfund. This ensures continuity. Often the husband and wife will decide to be the trustees of the SMSF and this is not advisable. If you don’t have a corporate trustee it can cost you more by way of fees and charges that are levied on the SMSF. Also in the event that one of the trustees passes away, it will leave you in a situation where there is only one trustee and additional costs have to be incurred to appoint another trustee and this procedure can be costly. However if you have a corporate trustee, this ensures continuity. When you make an offer on the property you must put the name of the trustees of the SMSF as the purchasers on the Contract of Sale and the deposit must be paid from the Superfund. If the trustees are not listed... read more
What you should know before signing a Contract of Sale to purchase a property

What you should know before signing a Contract of Sale to purchase a property

What you should know before signing a Contract of Sale to purchase a property   Buying a property will probably be one of the most important financial decisions you will make in your lifetime. It is therefore important that you obtain the correct information before you sign the Contract of Sale. Firstly it is important to ascertain how you are going to fund your purchase and organize the necessary loan pre-approvals if you intend borrowing from a bank to fund the purchase. You have the option of going directly to a bank or dealing with a mortgage broker.  After assessing your financial situation they will give you a few options to enable you to set your budget. When you sign the Contract of Sale you will need to pay a deposit of 10% of the purchase price of the property. This can be in the form of cash a bank guarantee or a deposit bond. You must discuss all these options with your lender at the time of organizing the finance and decide on what form of deposit you will make. The bank will give you a pre-approval of a loan but you must remember that the bank will always need to conduct a valuation of the property prior to confirming that they can go ahead and finance your purchase. It is important to remember that when you buy a property at auction, it is an unconditional sale and you are locked into the contract that you have signed. You have no right to “cool of” or exit the Contract if you do decide to change your mind. Therefore... read more

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