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SMSF Service Provider Awards: SMSF property loans

Borrowing for property investment is a small but fast-growing feature of the SMSF marketplace. While still a relatively niche product, growing numbers of financial institutions are offering the limited recourse borrowing arrangements SMSFs need to gear into real estate.

National Australia Bank (NAB) was named a winner in the CoreData SMSF award for its residential SMSF property loans. The bank’s national manager John Minto collected the award.

Several features of NAB’s loans make them attractive to SMSFs, executive general manager of banking and wealth solutions David Gall says. These include competitive interest rates, fixed legal costs for residential property purchase, and terms that align to customer time frames of up to 30 years.

NAB has invested heavily in its staff’s capability and expertise in serving SMSF clients, as well as complementary product development. It has considered the different credit, policy and legal process implications for SMSFs using limited recourse borrowings, and has ensured it is as easy as possible for SMSFs to invest in property.

“We know a majority of SMSFs are held by SME business owners. As Australia’s largest business bank, our business bankers look after our customers’ SMSF banking requirements in addition to their business banking requirements,” Gall says.

According to Gall, the increase in the number of SMSFs is evidence that more people want to take control of their super and NAB regards lending to the funds as a growth area for its business.

“On average, SMSF members have significantly higher account balances and take a more active role in growing their retirement savings. This is a positive outcome for Australia’s retirement savings gap,” he says.

However, he adds residential property investment throughSMSFs is only 3.5 per cent – a very small proportion – of total residential property investments.

While residential and commercial property lending supports the investment strategy and goals of many trustees, property investment through super is not for everyone.

“It is important for clients to consider all investment options for their retirement savings, understand risks and ensure that investments are in accordance with retirement goals and objectives,” Gall says.

“The same considerations for investing in property also need to be considered when purchasing property via an SMSF.”

NAB is targeting SMSFs with a variety of tools, as well as its property loans, to help trustees manage their portfolios, including secretsofsuper.com.au, a website that offers how-to guides, strategies and news updates tailored for SMSFs.

“A significant number of NAB clients have existing SMSFs and NAB will continue to invest in overall SMSF capability and advice delivery,” Gall says.

More SMSF Service Provider Award winners

  • Perpetual: Australian share fund
  • PIMCO: Fixed income
  • BGL: SMSF accounting software/administration
  • Magellan: International shares
  • Macquarie Adviser Services: Cash and accounting
  • Colonial First State: Investment platforms
  • Multiport: SMSF administration
  • TAL: Life insurance
  • ING Direct: Term deposits
  • AMP Capital: Commercial property
  • AMP Bank: SMSF term deposits

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