SMSF applications are tricky, as there are a bunch of applicant entities that are involved and you need to make sure you have the correct detail in Loanapp so that the mortgage structure is correct.
In general, an SMSF mortgage will require the following entities/structure to be setup in your submission:
Trust Applicant: ABC SMSF Trust
Company Applicant: ABC Pty Ltd (this is the corporate trustee of the SMSF)
Trust Applicant: XYZ Properties (Bare) Trust
Company Applicant: XYZ Pty Ltd (this is the corporate trustee of the Bare Trust)
Person Applicant: eg Mr Smith (who will be the director of the Company Applicants)
(and maybe) Person Applicant: eg Mrs Smith (who will be the director of the Company Applicants)
Further, the Security property:
Can only be for investment purposes
Will be 100% 'owned' by the Bare Trust (XYZ Bare Trust)
And the Mortgage:
will be 100% held by the corporate trustee of the SMSF (ABC Pty Ltd)
Pre-approval applications can be submitted. We acknowledge that Bare Trust details may not be available at the pre-approval stage, and TBC (to be confirmed) Bare Trust details will be accepted for pre-approval submissions.
This article takes you through how to set this up in Loanapp
Setting up your application
When you first launch Loanapp and are setting up your submission, you will want to ensure that you have selected SMSF Loan? = Yes:
Setup your Applicants
This is the most important bit to get correct, as there are always a number of parties to an SMSF application, and they must be of the correct borrower type.
In general, an SMSF has:
2x Trust Applicants
An SMSF Trust, the Primary Borrower; and
A Bare/Security Trust, a Guarantor
2x Company Entities
A company that is Trustee of the SMSF, the Co-Borrower; and
A company that is Trustee of the Bare/Security Trust, a guarantor, and the entity that will hold the security property for the SMSF
Person Guarantor/s
Add the Primary Borrower: the SMSF Trust entity
Click Add Applicant, and select Trust:
Add the name of your SMSF entity, and ensure it is the Primary Borrower:
Add the Co-Borrower: the Pty Ltd Company that is the corporate Trustee for the SMSF
Click Add Applicant, and select Company:
Add the name of your Pty Ltd Company that will be the corporate Trustee for your SMSF, and ensure it is the Co-Borrower:
Add a Guarantor: the Bare Trust
Click Add Applicant, and select Trust:
Add the name of your Bare Trust, and ensure it is also a Guarantor:
Add another Guarantor: the Bare Trust Company
Click Add Applicant, and select Company:
Add the name of your Bare Trust Company and ensure it is a Guarantor:
Add the Guarantor/s: Person Applicants
Finally, you will want to add your Mr and Mrs Person Applicant Guarantor/s. Click Add and select Person Applicant:
And add the details of each of your Person Applicant Guarantors:
(repeat for how-ever many Person Applicant Guarantors you have)
You will now have the structure of your application ready to be worked through with more detail:
Complete all the Personal Details for your Person Applicant Guarantors
You can click through to the Person Applicant screen/s to complete the details of your Person Applicant Guarantors, which is the regular information you provide for mortgage applications: Name, DOB, Contact Details, Employment etc.
Set each Person Applicant with a Lending Guarantee of "Income only":
In Other Details: Ensure one (or both) or your Person Applicants are set as Director of a Company = Yes
Your Person Applicant Guarantors (Mr & Mrs Smith) will need to have their Identity Verified in the same way other AMP submissions require. For more detail on Digital VOI, please click here.
Complete the details of all your Company and Trust Applicants
Next you will want to go to each of your Company and Trust Applicant pages, and complete the detail for each of those entities. Remember that this is our setup:
Primary Borrower: ABC SMSF
Go to the Applicants page for your Primary Borrower ABC SMSF, and complete the detail. Note you must have:
Type of Trust: Superannuation Fund
Trust Purpose: SMSF
For Source of wealth, set Business Sourced Income:
Importantly, the Trustee must be the Primary Borrower Company (ie ABC Pty Ltd):
Co-Borrower: ABC Pty Ltd
Go to the Applicants page for your Co-Borrower Company (the trustee of the SMSF), and complete the detail. You can search via ABN Lookup to confirm and auto-populate the formal detail of the Company by clicking the magnifying glass against your Company Name:
This is wise, as the ABN Lookup will confirm that the Company is a registered ATO Regulated Self-Managed Superannuation Fund (required Company type for an SMSF submission)
Note that when you populate this detail, you need to then confirm (tick) that this Company is a Holding Company:
You should add a Source of Wealth for your Company - please add Company Sale or Earnings:
Add your directors and shareholders, who will generally be the Person Applicant guarantors:
You must also set each of your Directors as Authorised Signatories:
Guarantor: XYZ Properties Trust
Next, go to the Guarantor Bare (Security) Trust.
the Type of Trust will be Simple (or Fixed)
the Trust Purpose should be Security Trust
The guarantor company (XYZ Properties Pty Ltd) will be it's trustee:
Guarantor: XYZ Pty Ltd
Finally, go to the second Company (a Guarantor) that is the Trustee for the Bare (Security) Trust and complete the detail.
This is the Company that will hold (own) the Security Property, and is guaranteeing the loan with the security.
The Directors, Shareholders and Authorised Signatories of this company should again be your Guarantor Person Applicants:
When you have completed this detail, you will have ticks against all of your Applicants:
Complete the Financial Position
Next you will want to complete the Financial Position for your application.
Loanapp will present to you a Financial Position page for each of your Applicants. This means you will have a Financial Position page for Mr & Mrs, and then a Financial Position Page for each of your Company and Trust Entities. Whatever you enter on each of these pages will then be amalgamated into the primary Financial Position (for Mr and Mrs).
Add Assets & Liabilities
Asset Test
The Net Asset Test is verified automatically in Loanapp.
Ensure the Assets under the SMSF are accurately captured.
Assets will be inputted pre-purchase value.
All of the SMSF's liabilities must be entered in this tab as well
The SMSF must have at least $250k Net Assets (Net Assets = Assets – Liabilities)
Capture all of the information under the SMSF Trust Financial Position – Assets & Liabilities
Liquidity Test
Liquidity test is verified automatically in Loanapp.
Ensure liquid assets under the SMSF are accurately captured.
Liquid Assets inputted must be pre-purchase assets (ie. Includes funds to complete)
Enter all of the SMSF's liquid assets
Term Deposits and Transaction accounts
Superannuation
Savings
Capture all of the information under the SMSF Trust Financial Position - Assets
Add Superannuation Contributions
A key item that you will want to ensure you enter is to enter the superannuation contributions that are being made to the SMSF. This detail is added into the Income section under Other Income:
In this section you can add any Super Contributions made:
Generally, the Company and Trust entities that have been setup for this application will be 'fresh' entities - they won't have existing assets and liabilities. So for each of the Financial Positions for the Company and Trust Entities, you will most likely not need to enter much detail. Click through each of them - the mandatory data for each will be the Foreign Tax position; and the details of the accountant:
Add your Security Property
Next you will want to add the property the SMSF is purchasing:
When you add your property, you will need to add the ownership of the security property. You will be presented with ALL your applicants with 0%:
It's important you set the correct entity to have ownership for an SMSF setup - this will be the Bare (Security) Trust. This Trust holds the property asset, and guarantees your SMSF Mortgage:
You can also add all the other details of the security property, including expected Rental Income, which will be important in the assessment:
In the Loan Details section, the Company Trustee for your SMSF needs to be set as the mortgagor
In the Loan details section, you will now want to add all the detail for the Loan and Mortgagor. Your SMSF entity and trustee Company will be listed - add 100% ownership against the Company that is to be Trustee for your SMSF:
Complete Loan & Serviceability
Add Contributions
Funds to Complete must be loaded under Deposits and Contributions.
Note that this will be subtracted from the liquid assets in the calculation of the liquidity test.
Liquid assets – Deposits & contributions = Post Settlement Liquid Assets
Compliance: Borrower and Guarantor Sections
When you get to the Compliance section, you will note that there is an extra page - the Guarantor Interview Guide. You will need to complete both for an SMSF submission:
Supporting Documents
When you generate your supporting documents checklist, it will generate with a set of SMSF-related documents you will need to submit along with your application submission.
When you are ready, submit your application 🤩