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  • Are you a buyer – or a super-buyer?

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    At Mortgageport, we process unique home loans every day, so we’re used to dealing with big numbers. But even we’re astounded at some of the figures surrounding the self-managed superannuation fund (SMSF) sector. According to the Australian Taxation Office’s (ATO) statistical overview of SMSFs for 2012-13, there are now 534,000 SMSFs with a total of $557 billion worth of assets.

    You’ll be a super-buyer, with loan settlement faster than a speeding bullet, an account balance more powerful than a locomotive, and able to clear big deposits in a single bound.

    Not only that, but the average SMSF member account balance in 2013 hit $524,000. There are more than 1 million of these members, who represent 9 per cent of all members in the superannuation industry.

    Those are some pretty striking numbers. What it says to us is that there are a lot of people out there with hefty super savings who could use SMSF property loans to build their wealth.

    At this point, you will be no ordinary buyer – you’ll be a super-buyer, with loan settlement faster than a speeding bullet, an account balance more powerful than a locomotive, and able to clear big deposits in a single bound.

    But remember – with great power comes great responsibility. Running a SMSF means you also have particular legal and ethical obligations you’ll have to meet if buying a property, along with some other considerations. Here is a brief sampling of what you might need to think about.

    Be careful what you buy it for

    Why not invest the wealth in your super to build more wealth?Why not invest the wealth in your super to build more wealth?

    SMSFs are essentially legal structures that are meant to give members an edge in saving for their retirement. Therefore, it’s only natural that any property bought through it is meant to provide retirement benefits to the members of the fund.

    You’re going to pay more than usual

    This means you can’t buy a family home with a SMSF, and you can’t have members or anyone related to them living or renting there. And don’t think about special ‘mates rates’ when you rent it out, either – your property should be competing on the market to earn you a profit. The ATO will know when you do the annual audit.

    The whole SMSF sector is intensely regulated. Because of that, the loan will probably be a bit more expensive than your average mortgage. For instance, you might have to pay a higher interest rate. In addition to this, the deposit for the home is typically 30 per cent – so make sure you have the sufficient balance in place to cover this.

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