Brokers that shy away from SMSF loans over compliance or complexity concerns are missing out on strong opportunities, says Homeloans' Greg Mitchell.
Brokers that shy away from SMSF loans over compliance or complexity concerns are missing out on strong opportunities, says Homeloans general manager of retail sales Greg Mitchell.
“There are certain extra things that need to be done around the trust and trustee and other areas but they’re actually not that onerous. The actual loan itself is not hugely different to writing out a normal home loan,” says Mitchell.
Recent figures from the MFAA show that direct property investments now make up more than 10% ($50b) of the 500,000 SMSFs in Australia – and that figure continues to grow.
Due to high demand over the past year, Homeloans recently released a new SMSF product with an 80% LVR, and the lender expects to see SMSF volume grow significantly.
“There are enormous opportunities there. We’ve got a top broker in NSW that is writing around 70 SMSF loans a month at the moment. Now we’re not getting all 70 of them but we could potentially get a lot more than what we’re currently getting – there’s certainly the demand there.”
SMSF loans are a valuable loan for brokers both in terms of diversifying revenue streams and customer retention, says Mitchell.
“Once you go through the process of setting up a self-managed super fund, and the finance involved with that, I don’t personally think it’s something you’ll be looking at in six or 12 months’ time and trying to refinance.
“It’s going to be more sticky for your transactions, and the whole diversification of a broking business can really start paying some credence with regard to what you’ve got to offer in the marketplace.”
The key to success in the SMSF sector, says Mitchell, is strong relationships with both financial planners and accountants.
“It’s not going to be something that every broker in the industry is going to put their hand up and want to be a part of, but certainly for the ones that do, and certainly the ones that have got those strong affiliations, it’s a great avenue of business for them.
“Because the level of up-skilling is a bit more involved, we’d probably steer clear of pushing it out to those brokers who might write one every six months, but if people can see themselves building a business around it and if they can get good strong referral sources there’s positive business there for them.”
Homeloans offers seminars which bring in financial planners and accountants to discuss the process of writing SMSF loans and any issues particular to lodging this type of loan.
Mitchell urges any brokers with doubts around SMSF loans to get in touch with Homeloans or their BDM for support.
“If they’ve got any greyness or are unsure about any part of the process we can be involved in helping them get through these sorts of questions.”
