Non-bank launches SMSF-only loan to top 'price gouging' big banks

by Mackenzie McCarty14 Oct 2013

Firstmac’s online direct-to-consumer brand Loans.com.au has launched an SMSF-only home loan for residential mortgages in a bid to buy into the rapidly growing sector.

The loan on offer includes a 4.99% (comparison rate 5.04%) SMSF-only product for residential investment property refinances and purchases, with an LVR of up to 80%.

While Firstmac owner, Kim Cannon, was overseas and unable to provide comment this morning, a Loans.com.au spokesperson says the group opted to make the move because they believe they can offer a competitive alternative to the major lenders who are, in the spokesperson’s words, ‘gouging’ prices on SMSF-only loans.

“[SMSF residential property loans] have been around for a few years now and they haven’t turned out to be the big risk that everyone thought they’d be, because most people are buying for their retirement - they’re not speculative. They’re not trying to buy a unit in Sydney and sell it within a year,” says the spokesperson.

“We looked at it and we had a couple of advantages over the banks in that we don’t have to put it across a commercial portfolio…we’ve got lenders mortgage insurance on each of these properties as well, which we pay the premium for.”

The spokesperson says that one major lender is currently offering an SMSF investment property loan at a variable rate of 5.98% (comparison rate 6.09%), plus an establishment fee of $1,500 and additional standing legal costs. Loans.com.au’s offering, on the other hand, will include fees of just $970.

There is some speculation that Firstmac might opt to offer the specialised loan via its broker channel in the near future, with the spokesperson admitting that it is a possibility.

“We have to see what sort of appetite there is for this loan…it’s still a niche industry. Don’t forget, also, that ASIC’s said they’re moving against financial advisers, accountants and brokers who get involved in trusts…So we’ll be waiting to see what they do.”

COMMENTS

  • by Albert Waldron 14/10/2013 10:25:08 AM

    Where is the support for the Broker Channel after years of begging us to continue supporting Firstmac during the GFC? Very disappointing Mr Cannon

  • by Richard 14/10/2013 10:28:04 AM

    I look forward to hearing about the complete shambles these direct online loan applications become and the thousands of dollars in non compliance fines the SMSF's receive because the loans and the required borrowing and ownership structure are not set up correctly. I am amazed at how many operators in our industry have no clue when it comes to the correct set up for SMSF lending and this included direct banking staff as well as brokers, lawyers and accountants. How on earth will Firstmac cover their time costs correcting all the mistakes that inevitably will be made for 4.99% and $970. It’s not all about rock bottom rate and fees people. It’s about expertise. Once again you get what you pay for.

  • by Melbourne Broker 14/10/2013 10:55:35 AM

    Dear Mr Cannon,
    If you are reading this message, please consider rolling out this product to the Broker Channel at the same time.