In September 2007, the The Superannuation Industry Supervision Act was amended to allow Super Funds to borrow and grant mortgages so long as a specially prescribed structure is used.
 

This article refers to this being a "new" frontier, even though the amendments came into effect nearly two and a half years ago, because it has only been recently that the banks and the trustees of the self managed super funds (SMSFs) have really started to put together the deals to put the changes in the law into effect.

There are strict conditions which must be satisfied:

• The loan funds must only be used to acquire an asset which the SMSF is is permitted to acquire
• The asset must be held on trust for the SMSF while mortgaged
• The SMSF must acquire a beneficial interest in the asset
• The SMSF must have the right to acquire legal title to the asset by making one or more payments
• The loan must be a limited recourse loan - that is, rights of the lender (to recover borrowings from the SMSF) must be limited in recourse to the asset being the security property

It is very important for the SMSF to obtain proper advice about the SMSF Loan.  If you would like any further information, please contact Rebecca Flynn or Anika Fleet.