Saving for and growing your retirement nest egg takes a fair bit of planning and forethought. While you can leave things like your super to be managed by other people, if you want to, you can manage it yourself.
If you’re looking to take a more hands-on approach to your super, you might want to consider a SMSF, and using a loan to grow it.
What is a SMSF?
A self-managed super fund (SMSF) is essentially like any other super fund, except for a few key differences. Firstly, it’s private in the sense that only you (and potentially three others) can be a part of it. Secondly, you’re in control.
Managing a SMSF takes a lot of time, effort and knowledge – you should consider your other commitments before starting one. All trustees or directors are responsible for complying with the relevant investment laws, so it’s not something you want to start without proper consideration and planning.
What can you do with a SMSF loan?
The main use for a SMSF loan is to purchase investment property. Considering how valuable property is as an investment, it makes sense for people to be able to use their retirement savings to build a portfolio.
It’s important to note, however, that a property your SMSF purchases is exclusively for investment only – none of the fund trustees or their relatives can live in it, nor can they be the one that rents it out. That’s the job for an appointed trustee. You can live in the property once you retire – all that happens is the ownership is transferred from the fund to you.
How can you get a SMSF loan?
Getting a SMSF loan with Redrock involves following a few steps:
1. Establishing a SMSF – this is where you ensure your trust deed allows for investment in property, as well as taking loans to do so.
2. Gaining pre-approval from Redrock.
3. Establishing the bare trust deed – this is the stage where you organise another trustee to purchase the property on the fund’s behalf.
4. Formalising the purchase contract – this is where the deposit is paid by the SMSF.
5. Valuing the property – after the purchase contract signed, the house is valued.
6. Formally approving the loan, sign the documents and settle – the loan is formally approved, and documents are sent to you to sign. Once done, the process is complete.
For more information on apply for and obtaining a SMSF loan with Redrock, get in touch with us today.
