Home Loan Using Super Contributions

Leverage your SMSF to Apply for a Home Loan.

If you want to get approved for a home loan and contribute to a super fund, you’re in the right place.

Some lenders out there consider super contributions to assess your borrowing power, especially if you’re under a salary sacrificing agreement.

Finding lenders who take your SMSF contributions into account will ensure you’re maximising your borrowing power, regardless if you’re paying into an SMSF or paying as you go (PAYG).

Pay As You Go (PAYG)

Most lenders in the market will consider your salary sacrificing SMSF contributions as expenses since your payslip should indicate them as a deduction.

That said, your SMSF contribution will decrease your borrowing power when lenders evaluate your application.

Even if you’re contributing for tax benefits and can exit the SMSF at any time, you’re still less likely to get approved under a PAYG assessment.

Choosing the most suitable bank.

Some lenders in the industry take your super fund contributions into account and add them to your overall borrowing capacity.

It’s all a matter of finding the right lender and negotiating the right terms and rates. With the right mortgage specialist to back you up, you can find one who will evaluate your SMSF contributions alongside your assets and borrowing power.

Feel free to speak with our specialist mortgage brokers at 1300 052 055 and discover if you qualify today.

Will lenders consider all concessional contributions?

We have a few lenders in our panel who will take 100% of your SMSF contributions into account, especially if you want to apply for a personal home loan and not under your SMSF.

If you’re applying under an SMSF, many banks and non-bank lenders will consider about 85% of your contributions, while there are still some lenders who add back all of it.

Are there restrictions when using PAYG and SMSF?

For home loan applicants using PAYG, most banks may require you to provide an official statement or proof straight from your employer that you can exit the SMSF contributions anytime.

On the other hand, banks and non-bank lenders are typically unsure if you can easily withdraw from the existing super fund. But some will evaluate your application with common sense that you will only pay contributions as soon as you’ve bought the residential property.

However, consider your options first if you’re nearing retirement and have made your concessional contributions for a long time.

That’s because exiting the super fund to meet your mortgage repayments might put you into unexpected financial trouble.

Will banks consider other salary packages as income?

Taking the time to discuss with us how you’re getting paid will help us determine all your taxed and untaxed wages to point you to the ideal lender.

In most cases, our mortgage brokers can help you include salary-packaged incomes to improve your overall borrowing power, including:

• Home loan: You can take advantage of tax benefits by packaging your home loan. That way, your employer should pay the loan directly, so we usually follow a credit line style to process this type of application.
• Novated lease: Depending on your employer, you can pay for leasing costs under your pre-tax salary to finance a new/used vehicle.
• Rent payments: While this raises a potential issue since the rent and benefits stop after purchasing the property, we can always get away by packaging the loan after it is advanced.
• Electronic goods: You can salary-package electronic goods such as laptops and phones as well.

Concessional and Non-Concessional SMSF Contributions.

Concessional SMSF contributions are generally contributions before tax to help you save up in taxes and significantly grow your retirement funding/savings.

This is an excellent option for low-income earners as they can also qualify for government co-contribution.

On the other hand, non-concessional SMSF contributions are after-tax payments above the Super Guarantee (SG). In this case, you don’t need to pay taxes on contributions as long as you meet the contribution cap.

Feel free to speak with the Australian Taxation Office (ATO) to know whether you qualify for government co-contributions and tax refunds.

We also recommend seeking expert financial advice before making any SMSF-related decisions, so you stay updated on the latest payment caps and tax-saving changes.

You can rely on our specialist mortgage brokers at Plan A Mortgage for a home loan application.