Are you paying too much interest?

If you’re paying over 9.5% for your SMSF loan, you might be paying too much!

Major banks have slowly exited the SMSF lending market, also known as Limited Recourse Borrowing Arrangements (LRBA). As a result, there is still a lot of customers that are paying >9.5% and repaying the debt over 15 years. The good news is the market has moved and there are other lenders in the market that are offering competitive rates with longer loan terms at 30 years.

Depending on your loan to value ratio – this is the outstanding loan balance divided by the value of your property, rates can start from 7.69%.

Here’s an example of the impact, changing your loan term can have on your repayments.

As the loan term has been stretched, there would be a higher amount of interest repaid over the life of the loan. You will need to consider the benefits the lower repayments have vs the interest spent over the life of the loan.

Like with any financial decision, it’s important to discuss this with your financial planner. Rates can change and lending criteria needs to be met, so should you want to explore your options, reach out to the D and C Finance team who will review your unique financial situation.

*Assumptions: 60-70% LVR, with rates as at 1^st February 2024.