Forums / Getting Technical / Legal & Accounting / SMSF rules for property investing

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  • Profile photo of daffswandaffswan
    Participant
    @bwan
    Join Date: 2005
    Post Count: 3

    Hi All,

    I have recently setup a SMSF and I am purchasing a property in it. However, the valuation came in a lot lower and so I did not get the requested loan amount. To go ahead with the purchase it would mean a bigger deposit as I am borrowing less. However, this goes against my investment strategy. It would mean 90% invested in property, a very small cash reserve and not a very diversified fund.  Does anyone know is there anything in the SIS act that would legally stop me going ahead with this transaction. I am trying to get out of the contract but trying to understand the implication of worse scenario of having to go ahead with the purchase. Cheers

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,190

    Legal advice is needed.

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of Ethan TimorEthan Timor
    Participant
    @ethantimor
    Join Date: 2016
    Post Count: 282

    If the only issue is the val coming low, then it may be prudent to do some val hunting?

    How did you get this val? Direct from the bank or was a broker involved?

    Is it an upfront val or was a loan application submitted?

    Ethan Timor | Aligned Finance Pty Ltd
    http://www.alignedfinance.com.au/
    Email Me | Phone Me

    Active Investor & Broker; Based in Northern NSW, servicing Australia wide; Author of '34 Proven Ways to Maximise Your Borrowing Power' (download free from our website)

    Profile photo of daffswandaffswan
    Participant
    @bwan
    Join Date: 2005
    Post Count: 3

    The valuation came from a financial institution, but it was done through a mortgage broker. It was all done so backhandedly. The mortgage broker company assisted me in setting up everything in my SMSF, but the amount I could borrow came in a lot less due to the valuation. The first I knew was when a solicitor contacted me and the settlement figures didn’t add up. When I started investigating, it turns out the valuation was a lot lower, so the bank lent me less monies and the mortgage broker had simply up’d the deposit without even contacting me.

    Subsequently I have got an independent valuation and he valued the property the same as the bank.

    I have now got an independent solicitor involved, helping me on the property contract side. Just concerned the risk I am exposing my SMSF to, if I have to go ahead, as I will have hardly any cash funds left and worried I will potentially breaching my SMSF.

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,190

    Your broker assisting with the SMSF side is illegal so you might have a claim against them through the credit ombudsman or financial services ombudsman.

    Was it a related company that sold you the property?

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of daffswandaffswan
    Participant
    @bwan
    Join Date: 2005
    Post Count: 3

    Yes the mortgage broker was a related company to the property. I know I have been scammed but it is very hard to prove anything.

    I am going to file a complaint with the Credit Ombudsman but think it will be too late in relation to stopping the purchase of the house.

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,190

    What has your solicitor advised?

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of HouseofwealthHouseofwealth
    Participant
    @houseofwealth
    Join Date: 2018
    Post Count: 7

    If a mortgage broker set up an smsf without providing a statement of advice as a registered financial planner under an authorised rep or license then they have committed a criminal offense.

    Houseofwealth | HOUSE OF WEALTH
    http://www.houseofwealth.com.au
    Email Me | Phone Me

    MELBOURNE PROPERTY ACCOUNTANTS

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