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Now is the time to review your loan arrangement, investors told
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Now is the time to review your loan arrangement, investors told

Now is the time to review your loan arrangement, investors told

by Reporter | July 12, 2019 | 1 minute read

Those property investors with property in their superannuation should review their arrangements in light of current market conditions, according to one specialist lawyer. 

Documents
Documents
by Reporter
July 12, 2019

Loans taken out within superannuation are typically limited recourse, meaning the lender is not able to use the assets held in the fund for security – it is only permitted to use the physical property itself. 

However, according to DBA Lawyers director Dan Butler, some contracts have surfaced, which take into account the other assets the superannuation fund holds outside of the property. 

“I read one the other day that said that any asset you hold on trust is also up for grabs. Some of them also say, well, if it’s interest and cost and damages, we can also claim that back, even default interest,” Mr Butler said. 

The documents that deal with the guarantee for the loan arrangements may need to be reviewed to ensure investors and their properties are adequately protected. 

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“That would be those that bought an apartment and it’s now close to negativity equity and they’re getting light on the loan-to-value ratio because the property value has sunk but the loan is still there and they’re no longer over their 70 per cent threshold,” said Mr Butler. 

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