Whilst Government policy and legislation still allows for borrowing by superannuation funds to purchase assets, from a practical point of view it is becoming harder for trustees to source funds from the lending institutions (primarily banks).
Under lending arrangements prescribed for SMSF borrowing, among other restrictions, the loans have to be non-recourse. This means that the only asset the lender can mortgage is the asset being purchased.
They cannot access any other super fund assets to repay the debt in the event of a default by the borrower. To add to their security, the lenders also seek personal guarantees from the trustees of the super fund. The Government is preparing a ban on this practice and as such could see lenders abandon SMSF lending. Click on the link below to read more.
https://listermason.com.au/new-campaign-focuses-on-apprentices-and-trainees/
This article appeared in our October 2015 newsletter
