SMSF borrowing capacity is the amount a lender may approve after assessing the fund’s contributions, rental income, expenses, existing liabilities and loan structure. The result varies by lender because policy inputs and serviceability buffers differ.
For SMSF loans, calculate capacity only after confirming that the proposed purchase and borrowing structure have been reviewed by qualified legal and financial advisers. A broker should not create or advise on the fund’s investment strategy.
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Information to collect
- fund trust deed, investment strategy and current financial statements
- member contribution history and evidence of ongoing contributions
- proposed rent, property costs and the loan deposit
- details of existing fund assets, debts and liquidity
Run the lender calculation
Enter only income the lender accepts and apply its treatment of fund expenses. Test the proposed repayments at the lender’s assessment rate, not only the advertised Interest Rates. Confirm any minimum liquidity or contribution requirement in the current policy.
Compare the result with the fund’s cash needs after settlement. The final choice should leave room for property costs and loan repayments, and must fit the advice the trustees received from their licensed advisers.
