Employing a Do-it-Yourself Superannuation Fund to Purchase a Property

There was a change recently in the Superannuation Tax Laws. The new law allows Australians with huge amount of DIY funds to borrow from loan providers in order to purchase a property.Funds

With the unstable state of the financial industry, both local and international, many Australians who are searching for any means to expand their investments grab this approach in investment.

A Do-It-Yourself finance can potentially be spent to buy a holiday, commercial, retail, and residential units – susceptible to the property as acceptable to the financial institution.

This property investment approach applies by using the super fund as the owner of the purchased property while there is a mortgage involved. The eligible proprietor of the property should be a trusted entity.

DIY funds will require some important payments including maintenance and repair cost, insurance and rent income, loan provider fees, home loan repayments, taxes, and any other related fees and charges.

Individuals who are considering this process towards property investment must take into account some associated charges, not to mention the setup fees, accounting and legal fees, and other administrative and operation expenses.

Majority of the home loan providers will require home loan applicants to follow this method along with a financial adviser to make sure that any property investment is appropriately analysed and is perfectly suitable for the client’s lifestyle and financial needs.

Possible benefits:

  • The investor is capable of selecting a property;
  • This is another alternative for individuals who are seeking for an investment;
  • Many people are already familiar with the process. Hence, it is already comfortable to get a property investment;
  • Can have offset rental income and other related costs;
  • Other valuable assets of investors could be protected from the risk of borrowing.

Possible challenges:

  • Complicated process – as most commonly practiced, the transaction requires consultation with a financial adviser, solicitor, and accountant;
  • The lending criteria can be rigid and a bit demanding;
  • Borrowing will increase the possibility for a huge loss from a particular investment. Therefore, it is very important to conduct extensive research prior to making any major investment.

Now, are you considering having a Do-It-Yourself superannuation fund to buy a property investment?