AMP Bank has announced the relaunch of its limited recourse borrowing arrangement (LRBA) offering for SMSFs aimed at trustees looking to use gearing to acquire residential property for their fund.
The facility, called SuperEdge, will be made available through AMP’s network of brokers and home-lending specialists with the aim of servicing SMSF members, particularly pre-retirees, who are wanting to invest with greater control and confidence, while maintaining the flexibility and liquidity they need.
AMP Bank group executive Sean O’Malley told selfmanagedsuper the organisation took this strategic step because it recognised there is an unmet demand in the market.
“We’ve had a strong amount of feedback and requests from brokers and planners saying that they want choice. Banks, including ours, pulled out of SMSF lending from 2018 so we’re responding to what we see as a part of the market that is not being well served and we know it’s a big segment,” O’Malley explained.
“The other why for us is AMP has centred its strategy on helping people create wealth so they can retire with confidence and we think that helping SMSFs leverage into property is one way to achieve this.”
One feature of SuperEdge is the ability for trustees to repay the loan on a principal and interest plan or interest-only basis, the latter of which is restricted to a five-year time period.
Other elements contained in the offering include an optional offset facility and a broker-first digital experience allowing applications to be lodged and tracked in one place with automated SMSF structure checks, LRBA prompts and document validation.
Further, SuperEdge will only be available to SMSFs with a corporate trustee structure, with a minimum loan-to-value ratio of 80 per cent to be applied.
“The point to make there is when you look at the data on new SMSFs being opened up, 86 per cent of them are employing that corporate structure so that’s where the market is,” AMP lending and everyday banking director Michael Christofides said.
AMP has restricted the product to be used to acquire residential property only, excluding off-the-plan purchases along with construction, rural or commercial securities, and owner-occupier situations. There are location restrictions as well.
“This goes back to us again wanting to make sure that we’ve got the right safeguards and protection in place and learning from experiences of these products in the past,” Christofides noted.
An SMSF will have to hold a minimum balance of $300,000 before it can employ the SuperEdge offering.
“We considered what is the right minimum size for an SMSF taking into account the costs associated with compliance and audits et cetera, and $250,000 has been referenced a number of times in the past and we wanted to make sure we were cognisant of that research, so $300,000 was chosen for being just north of that,” Christofides indicated.
AMP will charge SuperEdge clients a $10 monthly flat fee, which includes the optional offset account facility.
The product is currently in a pilot testing phase and is set to be released to the market in the first quarter of 2026.
