Branching Out - Resimac

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feature / self-managed super funds 26 / branching out SMSFs Seizing a growing opportunity Story / emily mclean
Self-managed super funds are the fastest growing area of lending in australia – and a major opportunity for brokers Self-managed Super fundS (SMSFs) are not new. However, disenchantment with the share market has left investors wanting greater control over their retirement savings, and when superannuation laws were amended to allow SMSFs to borrow to purchase an investment property, an opportunity for brokers to diversify into a new area arose. There are already 458,561 of these funds and this figure is growing at a rate of approximately 2,500 per month, according to the Australian Taxation Office. Furthermore, the Australian Prudential Regulation Authority (APR A) reports that as of December 2011, 30.6 per cent – nearly one third – of super assets were comprised of SMSFs. Required Finance broker Anthony D’Alessandro says he writes SMSF loans weekly, and being able to support SMSF clients now forms a large part of the company’s offering. “SMSF loans count for around 20 per cent of our total business and we’re hoping to increase that number beyond 40 percent with further training,” Mr D’Alessandro says. Affiliate Finance and Property’s Mary Sartinas, who is currently working on five SMSF loans, has a similar view. “If legislation stays as it is and lenders reduce their exorbitant fees, then I expect super will become a significant part of my business,” Ms Sartinas says. The lender perspecTive Lenders too are well aware of the increased interest in investment property purchases via an SMSF. Darren Little, head of mortgage broking at St George, says the SMSF loan is undoubtedly one of the bank’s fast growing products. Little’s advice to brokers is to just get in and have a go. The SMSF rules are not as complex as people think, he believes, adding that there are already plenty of brokers doing a good job in the SMSF space. David White, joint managing director of non-bank lender Australian First Mortgage (AFM), says the benefits of getting a client into an SMSF loan are considerable. “SMSF loans are sticky loans,” he says. “The average term for a residential loan is down to three years but brokers are looking at 10 years or more with an SMSF loan.” Mr White says brokers are in a prime position to offer SMSF loans due to their having referral networks. “Half of all clients “The average term for a residential loan is down to three years, but brokers are looking at 10 years or more with an sMsF loan” seen would have the required amount of funds to purchase property,” he says. “A broker could therefore take them out of their current super [which is] earning one per cent and turn that into a five per cent fixed investment.” The knowledge necessary While SMSF lending offers growing opportunities for brokers who want to diversify, there’s no getting away from the fact that the rules for funds and their administration are complex. Brokers need to get educated – branching out / 27
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Page 41 and 42: Put it on the bill Story / Emily Mc
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