Commercial SMSF loans becoming increasingly popular

With non-banks now the only game in the SMSF area

Commercial SMSF loans becoming increasingly popular


By Mina Martin

Faced with the skyrocketing rental prices of commercial spaces, more business owners are opting to buy a commercial property to accommodate their operations – and one way they are doing this is through a commercial SMSF loan.

“We have been experiencing an increase in SMSF lending for self-employed borrowers who are seeking to acquire commercial properties for occupation by their own businesses or refinancing out of institutions that no longer offer this product type,” said Peter Vala, general manager for partnerships and distribution at Thinktank.

“Of the SMSF transactions we have financed, approximately 80% are commercial in nature and are used to acquire a property for the fund members to locate an associated business as an arm’s length tenant.”

With major banks exiting the SMSF area several years ago, non-banks like Thinktank and La Trobe Financial are now the only game in town.

SMSF arrangements for commercial property purchases are becoming increasingly popular in a market once dominated by more traditional methods, including special purpose vehicles or trusts, with non-banks actively refining their offerings in the area to make them attractive to customers.

Vala said Thinktank has been seeing a surge in SMSF limited recourse borrowing arrangements for purchase and refinances, and the company’s recent policy changes further address this demand.

“With no liquidity requirements or minimum net asset conditions, we’ve been attracting an increasing number of customers who are also taking advantage of our ability to use projected concessional and non-concessional contributions for servicing, especially when the fund is newly established,” he said.

SMSF growth was also being fuelled by a growing number of people managing their own financial affairs, especially at a time when some superannuation returns were not meeting customer expectations.

“For several years now, our SMSF product has been one of our most popular loans,” Bannister said. “With more and more Australians opting to invest their superannuation in real estate, considering an investment in a commercial property could help diversify a borrower’s portfolio. Bringing a customer’s attention to the benefits of commercial property investment – be that within their SMSF or otherwise – could help open a door of possibilities for both brokers and their clients.”

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