Mortgages for Terminating your home loans and Supercharging your SMSFs
Since 1994 Robert has been provided clients with both residential and commercial loan products from Australia's leading banks and non-bank lenders.
For Debt Termination purposes, we offer prominent lenders products provided by our partner FAST.
The following are some of the typical characteristics of an owner occupied or investment loan suitable for Debt Termination available in the market today:
Rental income and negative gearing benefits relied on to assess how much you can afford to borrow -- this means you may be able to borrow more!
Borrow up to 95% of the purchase price (or valuation if lower), more if you hold other property
Up to 30 years interest only repayments, increasing your potential to tax-deduct the entire repayment, for longer
Professional packages with capitalising lines of credit and one low annual fee together with discounted variable and fixed interest rate options
To Supercharge your Self-Managed Super Fund, we offer prominent bank & non-bank products provided by our partner PMM.
The following are some of the typical characteristics of an investment loan suitable for inclusion in a SMSF available in the market today:
Rental income at up to 80% & ongoing 9% super contributions relied on to assess how much your SMSF can afford to borrow & meet servicing obligations
Borrow up to 80% of the purchase price (or valuation if lower) depending on the lender chosen and the balance in your SMSF after deposit and costs have been deducted
Up to 10 years interest only repayments followed by 20 years of principal and interest
Minimum loan amounts starting from $50,000 apply
How does a lender calculate if your SMSF can afford to purchase a property?
The following is an example of how the CBA determines eligibility: (if your scenario passes this test, it will pass all other banks tests too)
Assumptions
[Minimum loan amount is $256,200 @ 70% of purchase] ~ [Interest rate is 8.15% but they use a 'test rate' loading of 10.15%] ~ [Purchase price of property is $366,000] ~ [Rent per week is $320 and they discount this back to 80%] ~ [Balance of cash remaining in fund is $30,000 & the bank pays an annual interest rate of 4.5%] ~ [Borrowers combined incomes total $100,000] ~ [Funds required from SMSF balance = $109,800]
Calculations they will use:
Loan amount of $256,200 x 10.15% IO = $26,004
Loan amount of $256,200 x 10.15% PI = $27,324 (this is the amount the bank wants to see serviced per annum)
Rent amount of $320 x 80% = $13,312 per annum
Funds left in SMSF of $30,000 x 4.5% = $1,350
Borrowers ongoing SMSF contributions x 9% of $100,000 = $9,000
[$27,324 (loan interest) less $13,312 (incoming rent) plus $1,350 (interest paid to you by bank per annum) plus $9,000 (super contributions)]
$13,312 + $1,350 + $9,000 = $23,662 »This amount needs to be equal to or more than the $27,324 that the bank wants.
From the above example, we can see that the loan wouldn't be approved by the CBA as its $3,662 short in annual income. However, if we use one of their fixed interest rate products eg 3 year of 7.70% then we don't need to add the 2% 'test rate' loading. New loan amount to be serviced is now $21,924 and this is lower than the $23,662 that is available from rent, interest and super contributions and would now be approved by the bank.
Look what happens if you include an income producing ATM into your SMSF
Another option is to include an income producing ATM into your SMSF generating guaranteed 20%+ annual returns before you apply for a property loan. A typical purchase may be a hole-in-the-wall (there are 3 types of ATM's starting at $13,000 + GST) ATM with a purchase price of $37,000 + GST generating a guaranteed minimum monthly amount of $625 or $0.35 per transaction whichever is the greater, from day one and will continue for the next 15 years. Now, lets see what the application looks like when you include an ATM into your SMSF:
Assumptions
[Minimum loan amount is $292,800 @ 80% of purchase] ~ [Interest rate is 8.15% but they use a 'test rate' loading of 10.15%] ~ [Purchase price of property is $366,000] ~ [Rent per week is $320 and they discount this back to 80%] ~ [Balance of cash remaining in fund is $23,400 & the bank pays an annual interest rate of 4.5%] ~ [Borrowers combined incomes total $100,000] ~ [Funds required from SMSF balance = $73,200] ~ [ATM purchase price including gst = $40,700]
Calculations they will use:
Loan amount of $292,800 x 10.15% IO = $29,719
Loan amount of $292,800 x 10.15% PI = $31,224 (this is the amount the bank wants to see serviced per annum)
Rent amount of $320 x 80% = $13,312 per annum
Funds left in SMSF of $23,400 x 4.5% = $1,053
Borrowers ongoing SMSF contributions x 9% pa of $100,000 = $9,000
[$31,224 (loan interest) less $13,312 (incoming rent) plus $1,053 (interest paid to you by bank per annum) plus $9,000 (super contributions) plus $7,500 ATM]
$13,312 + $1,053 + $9,000 + $7,500 = $30,865 »This amount needs to be equal to or more than the $31,224 that the bank wants.
From the above example, we can see that the loan would be borderline-approved by the CBA as its $359 short in annual income. However, if we use one of their fixed interest rate products eg 3 year of 7.70% then we don't need to add the 2% 'test rate' loading. New loan amount to be serviced is now $25,056 and this is lower than the $30,865 that is available from rent, interest, super contributions and ATM earnings and would now be approved by the bank.
For Debt Termination forms from banks and non-bank lenders offering lines of credit
| Westpac | Citibank | Macquarie | Commonwealth |
| Calculators | Calculators | Calculators | Calculator |
| Application pack | Application pack | Application pack | Application pack |
| Advantage package | Mortgage Plus package | Optimum package | Wealth package |
To Supercharge your SMSF forms from banks and non-bank lenders offering SMSF loan products
| Westpac - min $250k | Mortgage Ezy - min $50K | The Rock - min $50K | Commonwealth - Min $200K |
| Application pack | Application pack | Application pack | Application pack |
| Undertaking for legals | Fact pack - ask Robert | Fact pack | Brochure (5mb) |
| Checklist - ask Robert | Interest rate sheet | Checklist + SMSF borrowing power |
How to find out more
Robert Kirk Private Wealth Management
Phone: +61 7 3666 0126
Fax: +61 7 3666 0098
Email: info@kirkwealth.com.au