What Supporting Documents do I need for a SMSF Loan Application Process?

We list and explain the supporting documents required when assessing your self-managed super fund investment loan borrowing capacity and submitting your loan application for approval.

Working out your borrowing capacity and purchase budget

The amount of supporting documents to work out your borrowing capacity and purchase budget is a lot less compared to the situation where you need to submit an actual application for approval.  The purpose of understanding your SMSF borrowing capacity and purchase budget is to help you understand what you can purchase for your financial situation before you seek professional advice to establish your self-managed super fund (if you don’t already have one).

Our mortgage brokers can help you understand your:

  1. Borrowing capacity
  2. Deposit required
  3. Your purchase scenario
  4. Potential interest rate of your SMSF investment loan
  5. Potential loan repayments
  6. Potential lenders that would suit your particular financial situation

The types of supporting documents fall into two categories:

  1. PAYG company employees
  2. Self employed individuals – sole traders, partnerships, company directors

For PAYG company employees:

  • Two latest payslips of each SMSF member that will be part of the fund
  • Current superannuation fund balance of each SMSF member that will be part of the fund

For Self-Employed individuals:

  • Last two years business tax returns
  • Last two years financial statements (applicable for company directors only)

Supporting documents required for SMSF Investment Loan Preapproval

In addition to the above documents needed to work out your borrowing capacity and key numbers, when you’re ready to proceed to getting preapproved, your mortgage broker will need to prepare and submit your loan application.  In this case, you’ll require to provide all the documents required for this process.

  • Established and fully executed SMSF trust deed (must be compliant) certified copy
  • Last two years superannuation statement for each member (some lenders do not require this)
    • If you have an existing SMSF established, you will need to provide SMSF bank statements
  • Personal identification for each member – driver’s licence and passport
  • SMSF Registration documents
    • Proof of SMSF registration with the Australian Taxation Office (ATO)
    • SMSF’s Australian Business Number (ABN) and Tax File Number (TFN)

Pro Tip: Some lenders may require a copy of the bare trust however, the bare trust is only finalised once a purchase property is secured as the bare trust will need to record the purchase property details in the trust itself.  However, you may be able to obtain a draft copy of the bare trust if this is required by the lender.

How does the lender calculate borrowing capacity for an SMSF Investment Loan?

As the SMSF investment loan is a limited recourse borrowing arrangement, the lender will focus on the income and expenses of the SMSF only.

The income calculated for your SMSF will consist of:

  • Superannuation contributions into the SMSF fund which will include the superannuation guarantee paid by your employer and any additional superannuation contributions you are making via salary sacrifice or any non-concession contributions you are making into your super
  • Rental income from the property – this can be proposed rental income or existing rental income.  If the property is not currently rented out, the proposed income will be verified via a bank ordered valuation which will provide an estimated market rental income the property can achieve.  If the property is rented, then a copy of the current lease agreement will be required to verify this income.
  • Investment income – if the SMSF has also investments in other investments such as shares, managed funds, ETFs etc, the income from these investments can also be included

The expenses calculated for your SMSF will consist of:

  • The annual ongoing maintenance cost of the SMSF
  • The proposed repayment of the loan which is calculated based on the actual interest rate of the loan plus a serviceability buffer of 2% or 3% depending on the lender

Supporting documents to convert your SMSF loan application to formal approval

With your preapproval in hand, once you have secured your purchase property, it’s now time to convert your preapproval application for an unconditional approval.  The required documents you’ll need in this case will be:

  • Fully executed contract of sale
  • Updated bare trust with the purchase property details recorded in the trust deed

Supporting documents to refinance self-managed super fund investment loan

If you apply for an SMSF loan to refinance your existing SMSF lending, the supporting documents required will be the same as when you apply for a new SMSF loan.  The only additional documents will be:

  • Existing SMSF loan statements to confirm you have not missed any repayments in the last six months
  • Existing rental statement of your residential investment property or commercial investment property

Pro Tip: Lenders often waive the requirement to seek legal advice if you are refinancing your SMSF loan as you would have already sought this advice when you went through the original loan process.