Pepper Money unveils SMSF loan offering

The ATO’s report estimated SMSFs hold $876.4 billion in total assets with around 598,000 SMSFs, which was up 4 per cent on last year.

According to the non-bank lender, the new SMSF loan was developed in collaboration with brokers and is designed for SMSFs looking to purchase or refinance an existing property.

The “super smart” SMSF loan offers brokers direct access to Pepper Money’s credit team, with a digital supply solution and has been made available for both residential and commercial properties with lending of up to $3 million for each.

The launch addresses “the gap in the market” according to the non-bank lender, amid a resurgence of potential buyers’ searching for investment properties and the exit of the major banks from this niche market.

Barry Saoud, Pepper Money general manager, mortgages and commercial, stated there are also opportunities for brokers to bring further value for the clients as the banks retreat from this specialised lending space.

“SMSF lending is being embraced by a growing number of Australians as one way to have some control and independence over their financial future,” Mr Saoud said.

“The increased appetite for these loans, coupled with the lack of options for borrowers, presents an opportunity for brokers to add value for their current clients, as well as potentially adding new business streams to their practice.

“We often observe that while a client’s existing SMSF may be servicing the loan, many aren’t clued into the rate they are on.”

Aggregators Connective Home Loans and Finsure welcomed the introduction of Pepper Money’s new offering and the range of solutions and diversification it offers brokers.

Head of Connective, Michael Goerner, said the aggregator’s white label offering has now been “broadened the solutions available to brokers on SMSF transactions with some unique policy and product niches in this very competitive market”, while national commercial manager for Finsure, Jas Fazlic, said that the new offering further supports brokers to “diversify and meet the evolving needs of their new and existing client base”.

Buffers lowered

Pepper Money’s foray into SMSF lending followed the introduction of its “Red Hot Rates Package” in early August 2023 that was designed to help with “real life challenges” across key areas of concern for brokers and their clients.

The packaged introduced a lowered serviceability buffer of 2 per cent across the board, along with cutting interest rates from 50 to 164 bps and home loan terms of up to 40 years.

[RELATED: Pepper Money lowers serviceability buffer]