PowerSuper has launched an instalment warrant product for self managed superannuation funds (SMSFs), enabling the use of gearing to invest in domestic residential property.
The funding for the new offering has been provided by ING Direct, and represents the bank's first foray into the SMSF lending market.
To use the product, SMSFs have to provide a minimum deposit of 30 per cent for the property.
The warrant has a term to maturity of 30 years, with a minimum loan amount of $100,000 and a maximum of $2 million.
Full documentation is required and the maximum loan to value ratio is 70 per cent. The interest charged is currently 10.35 per cent, variable for the life of the warrant.
"This is an innovative and very conservative structure, that allows SMSFs to maintain some diversity in their superannuation fund, and invest in an asset class that delivers secure and reliable investment returns over the medium to longer-term," PowerSuper head of distribution Jo Parkinson said.
"Given the recent volatility in global financial markets and the fact that the value of many Australians' superannuation has been impacted... this product gives more control to SMSFs and provides access to one of the most stable and safe asset classes," he said.
SMSF trustees can only access the product through licensed professionals, such as accountants or financial planners.
