ATO Tax Form

A non-bank lender has entered the SMSF space offering finance for both commercial and residential property purchases or to refinance an existing property.

Pepper Money has launched its ‘super smart’ SMSF loan which it developed in partnership with mortgage brokers.

Barry Saoud, Pepper Money’s general manager, mortgages and commercial, said the exit of major banks in the SMSF lending space, created an opportunity to add more diversity of offerings in the space.

“SMSF lending is being embraced by a growing number of Australians as one way to have some control and independence over their financial future,” he said.

“The increased appetite for these loans, coupled with the lack of options for borrowers, presents an opportunity for mortgage brokers to add value for their current clients, as well as potentially adding new business streams to their practice.”

Mr Saoud said while a client’s existing SMSF may be servicing the loan, many aren’t aware of the interest rate they are locked into.

“This ‘set-and-forget’ mentality could mean some clients are on a rate without questioning it,” he said.

“Our SMSF loan offering now provides mortgage brokers with a ‘super smart’ approach for existing SMSF clients who aren’t getting the sharpest solution from traditional SMSF lenders.”

He continued that the Pepper Money super smart loan has a pre-approval feature which allows brokers to understand what their clients can borrow through their SMSF so that they can assess their options upfront.

“We also offer a maximum of two redraws per anniversary of the loan, to a maximum of $50,000 per transaction for repairs and maintenance of the security,” Mr Saoud.

He added Pepper Money can also consider clients who are directors of companies with credit impairment across both residential and commercial SMSF loans.

SMSFs can borrow up to $3 million for both residential and commercial properties with only $200,000 in net assets and no liquidity requirements.

There are 30-year loan terms with up to five years of interest only, and directors with credit impairment are accepted.

Until 12 January 2024, residential borrowings will have prime interest rates of 6.99 per cent and near prime from 7.69 per cent, with a 50 per cent discount on the establishment fee.

For commercial lending, the prime interest rates start at 7.89 per cent and near prime from 8.69 per cent.

Aquila Super