Why Should You Consider Refinancing Your SMSF Loans?

Reach out to SMSF loan specialist to understand the benefits of refinancing SMSF loans

There are several reasons you might want to consider refinancing your SMSF loans. Perhaps you’re looking for a better interest rate or need to free up some cash for investments. Whatever your reason, it’s important to understand the benefits and requirements of refinancing before making any decisions.

What Are the Benefits of Refinancing SMSF Loans?

  • Cash flow

When you refinance your SMSF loans, you can potentially free up cash flow that your fund can use to invest in other areas or even pay down the loan faster.

  • Interest rates

If interest rates have dropped since you originally took out your loan, refinancing could help you save on monthly repayments.

  • Loan term

If you can get a lower interest rate when refinancing, you may also have the opportunity to shorten the loan term and save on overall interest payments.

  • Save money

When you refinance your SMSF loan, you may be able to secure a lower interest rate and save money on repayments.

  • Repay your loan faster

If you refinance to a loan with a shorter term, you may be able to make higher repayments and pay off your loan faster.

  • Access additional features

Some lenders offer additional features when you refinance, such as the ability to make redraws or extra repayments without penalty.

  • Change lenders

If you’re unhappy with your current lender, refinancing allows you to switch to a different lender.

What Are the Requirements for Refinancing SMSF Loans?

  • Equity

To qualify for a refinance, you’ll need to have equity in your property. This means that the current market value of your property must be higher than the amount you owe on your loan.

  • Good credit

You’ll also need to have good credit to qualify for a refinance. This means paying your bills on time and maintaining a good credit score.

  • Stable income

Lenders will want to see that you have a stable income to qualify for a refinance. This means having a job or other source of income that is reliable and consistent.

What Are Some Other Considerations When Refinancing SMSF Loans?

  • Closing costs

When refinancing your SMSF  loan, you may have to pay certain closing costs, such as appraisal or origination fees.

  • Prepayment penalties

Some loans come with prepayment penalties, which means you may have to pay a fee if you pay off your loan early.

  • Minimum loan amount

Some lenders have a minimum loan amount you must meet to qualify for refinancing.

  • Exit fees

Some lenders charge exit fees for early loan repayment, so it’s important to check whether your current lender has any exit fees before you refinance.

  • Break costs

If you have a fixed-rate loan, there may be break costs involved if you repay your loan early. Break costs are typically calculated as a percentage of the original loan amount and can be significant, so it’s important to factor them into your decision-making.

  • Timing

It’s generally best to wait until your fixed-rate period has ended before refinancing, as this will help you avoid break costs. However, if you think interest rates are going to rise in the future, it may be worth refinancing sooner to lock in a lower rate.

  • ATO Rules

Since you’re dealing with an SMSF loan, you also have to consider ATO rules. For instance, the Australian Taxation Office or ATO says you can’t increase the amount your fund wants to borrow against the property when refinancing.

Get in Touch with SMSF Loans CO

When it comes to investing your super for a car, there are many considerations you need to satisfy. We offer SMSF lending services to help you find the right lending strategy to meet your financial goals.

Whatever you want to purchase, we only care about its benefits to your retirement. Get in touch with us today.

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