Administration, Property, SMSF

Non-bank lender to offer SMSF loans

SMSF loans Pepper Money

A non-bank lender has expanded its operations to include SMSF loans available to funds with corporate trustees and relatively low minimum asset balances.

Non-bank lender Pepper Money has joined the ranks of finance providers offering loans to SMSFs with the rollout of its own offering open to corporate trustee funds looking to purchase residential or commercial property.

Under the new lending facility, Pepper Money will provide loans from $100,000 to $3 million for up to 30 years for SMSFs that have minimum assets of $200,000 or more.

Loans can be used to refinance assets held within the fund or to purchase single-title residential investment property with an arm’s-length third-party rental agreement in place or single-title commercial property that can be used by an associated trading business with a non-arm’s-length lease agreement in place.

Pepper Money mortgages and commercial general manager Barry Saoud said the SMSF loan facility was developed in conjunction with mortgage brokers and created more diversity in SMSF loan offerings following the departure of the banks from this type of specialised lending.

“The increased appetite for these loans, coupled with the lack of options for borrowers, presents an opportunity for mortgage brokers to add value for their current clients, as well as potentially adding new business streams to their practice,” Saoud said.

“We often observe that while a client’s existing SMSF may be servicing the loan, many aren’t clued into the rate they are on. This ‘set-and-forget’ mentality could mean some clients are on a rate without questioning it.

“Our new SMSF loan offering now provides mortgage brokers with a ‘super smart’ approach for existing SMSF clients who aren’t getting the sharpest solution from traditional SMSF lenders.”

He said Pepper Money would also apply a pre-approval feature to allow brokers and their clients to see how much can be borrowed via the fund and would consider clients who are directors of companies with credit impairment across both residential and commercial SMSF loans.

Additionally, the lender would also offer two redraws of $50,000 per anniversary of the loan for Superannuation Industry (Supervision) Act-compliant purposes such as repairs and maintenance on a property asset.

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