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More roadblocks for SMSF property investors

Some SMSF trustees are set to face serious roadblocks if they plan to take out a limited recourse borrowing arrangement.

Broker Samantha Bright, owner of Thrive Investment Finance, noted the SMSF borrowing landscape had taken a hit since APRA announced curbs on investor lending.

Ms Bright believes lenders are still "dialling down" their activity in the space, with some of the smaller players, like credit unions, leaving the market altogether.

"The banks are saying they're purely pulling back because of their investment lending targets. They don't see this area as risky. They would say it if it was," Ms Bright said.

Given the nature of the market at the moment, it's a significant challenge for SMSFs with a balance of $200,000 or less to secure a loan.

"If you don’t have $200,000 in your fund, it's a really tough exercise. For those larger funds, it's absolutely still possible for them to buy property, it comes down to the strategy," Ms Bright said.

This, coupled with the ATO cracking down on borrowing from non-commercial lenders, like related parties, is making it increasingly difficult for SMSF trustees to secure finance.

More roadblocks for SMSF property investors
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