Case Study: Peta

We sat down with Peta and asked her a few questions on her experience, challenges, and how she overcame them.

I run my own conveyancing business in Sydney called the Property Xchange and my husband also works in real estate. We are experienced property investors. As well as our own home, we have owned a number of investment properties over the years. Because we already had mortgages over other investment assets, we were maxed out with the bank, but we definitely didn’t want to miss this opportunity. Investing through our SMSF was the next option. That’s when we discovered that the rules around SMSF financing were quite restrictive. The interest rates were also very high. Later on, after we’d made the investment, we decided to refinance the property to get a better interest rate. I’d only heard good things about loans.com.au from my clients, so when I saw that you’d started lending for SMSF I didn’t hesitate.

• Rules around SMSF property lending are much more restrictive than regular mortgage lending. When we were first looking to purchase this property through our SMSF, the lending limit was only $1 million. We had to fund the rest. It was very tough to find other sources to fund the difference. That was the biggest challenge at the time.
• The servicing rules are very different borrowing through the super fund as opposed to buying a property in your own name. You really need to get the right structure. You can't cross-collateralise with any properties outside the super fund. That caught us by surprise.

“I’d only heard good things about loans.com.au from my clients, so when I saw that you’d started lending for SMSF I didn’t hesitate.”

• We had to get finance outside super and then make non-concessional contributions to our SMSF to make up the property funding gap. That was successful but it meant we couldn’t negatively gear that extra contribution. It’s been a bit wasteful to be honest.
• I would strongly advise anyone considering a residential SMSF investment to engage an accountant who's highly proficient in the SMSF space. The accountant that we were working with at the time did tell us he knew the rules, but I don't think he knew as much as others who specialise in SMSF. I feel like there could have been other options for us which were never suggested.