STAR RATINGS REPORT. SMSF Lending

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1 2014 STAR RATINGS REPORT SMSF Lending

2 SMSF Lending November 2014 Foreword Self-managed super funds are not going away anytime soon. Indeed they continue to ride the wave of popularity. My baptism of fire with the sector involved one of the first articles I ever wrote for a commercial magazine. Back then, I knew little about SMSFs but call me a finance product nerd if you like I quickly became fascinated with SMSFs and their unique requirements for borrowing. I immersed myself in product disclosure statements and legislation to learn as much as I could. What made this area so interesting were the contrasts and nuances between borrowing through an SMSF compared to a regular investor. Without stealing any thunder from the report you are about to Mitchell Watson, Research Manager read, the major borrowing difference is that SMSF loans must be taken out under a Limited Recourse Borrowing arrangement (LRBA). That means should any default occur the lender can only access the asset securing the loan to recover the debt. It s a safety net to ensure multiple super assets are not wiped out by one transaction but it does impact the amount an SMSF can borrow. Because of this structure, standard loan products cannot be used by an SMSF, once again, adding extra cost to the borrower. It s heartening to see the number of lenders expanding their options as the SMSF market grows. The increased competition should result in lower borrowing costs for SMSFs. However, at the moment, the cost of borrowing remains at a significant premium to residential borrowing. The increased lender activity has also allowed us at CANSTAR to provide SMSFs looking for a loan a place to start their purchase journey. We have conducted a thorough analysis of products available from 20 lenders and for the second year I am happy to provide to you our SMSF lending star ratings. SMSF Lending 1

3 REAL ESTATE CONTINUES TO REEL IN SMSFS While direct shares continue to be the largest single investment class held within self-managed superannuation funds (SMSFs) followed by cash and term deposits - also continue to gravitate towards commercial and residential property ownership to swell their asset lists. The purchase of real estate often necessitates a SMSF loan. Based on June 2014 statistics, there are estimated to be in excess of 534,000 SMSFs with total assets of $557 billion, an increase of 6 and 12.4% respectively since June 2013, according to the Australian Taxation Office (ATO). Drilling down into the figures further, we see that last June s estimates for assets held by SMSFs under limited recourse borrowing arrangements (LRBAs) have been revised from $2.6 billion in March 2013 to $8.3 billion just three months later! LRBAs allow SMSFs to borrow money to buy a single asset as long as the lender s recourse is limited to that asset only if the SMSF defaults on the loan. Wow let s rewind that last paragraph an increase of $5.7 billion in three months! Before we get too carried away though, the sobering truth is that, while the value of these assets has definitely risen, the spectacular nature of the figures quoted is largely due to the ATO changing its data collection and reporting methods. The bad news? It is difficult to accurately report the growth of LRBAs over the past year. The good news? The new ATO reporting method will provide a more accurate point from which to determine growth in the future. The bottom line? Under this new approach to SMSF data collection, the ATO estimates assets held under LRBAs have grown to $8.7 billion as at June The full SMSF quarterly statistical report for June 2014 can be accessed at ato.gov.au. FILLING THE BORROWING NEED SMSFs are a growing market with an appetite for diversifying their portfolios to include property. From a bank s point of view, this is manna from heaven and an opportunity to service a specialized sector of the market and boost their own business numbers at the same time. A win-win for both parties. In the CANSTAR Star Ratings this year, 20 institutions offering loans specifically retro-fitted to suit SMSFs were examined across a range of variable and fixed rate terms over two different amounts, $250,000 and $500,000. The methodology we used is included later in the document. While substantially similar to borrowing personally, there are several notable differences when borrowing for an SMSF. The loan must be established on a limited recourse basis. This means if you default, the lender s recourse is limited to the single asset acquired and not other assets in your SMSF. There are further requirements such as setting up a separate security trustee. Because of this unique structure, standard loan products offered by financial institutions cannot be used by an SMSF. The mix of institutions offering loans under limited recourse borrowing arrangements includes the Big Three curiously, ANZ is absent second tier banks, mutual banks and some independent mortgage providers. Between them, they offer 91 lending products to SMSFs. November

4 WHAT ARE INTEREST RATES DOING? While borrowing within a SMSF is becoming increasingly popular, do have to pay for the privilege approximately 0.72% more on average, according to CANSTAR s research. Rate for SMSf Rate for Individuals Paid by SMSF (per month) Paid by Individual (per month) Difference in Paid (per month) Min 5.59% 4.54% $1,630 $1,324 $306 Max 6.79% 6.38% $1,980 $1,861 $120 Average 6.05% 5.33% $1,765 $1,555 $210 Assumptions: Paid is based on monthly interest only repayments made on a $350,000 loan taken over 25 years. Fees and charges not included. Source: CANSTAR, 29/10/2014 Over the life of a $350,000, 25-year home loan, this average interest rate differential could equate to an additional $45,500 in revenue for the lending institution. And the more trustees borrow, the greater the amount of extra revenue could be. DIFFERENCE IN BANK REVENUE FROM SMSF VS RETAIL Home Loans borrowed revenue from SMSF revenue from Individuals revenue for financial institutions $200,000 $302,500 $266,500 $36,000 $300,000 $453,750 $399,750 $54,000 $400,000 $605,000 $533,000 $72,000 $500,000 $756,250 $666,250 $90,000 $600,000 $907,500 $799,500 $108,000 $700,000 $1,058,750 $932,750 $126,000 $800,000 $1,210,000 $1,066,000 $144,000 Assumptions: Revenue is the total revenue over the loan term and is based on monthly interest-only repayments on a $350,000 loan taken over 25 years. Fees and charges not included. Source: CANSTAR, 29/10/2014 WHAT ABOUT THE LOAN TO VALUE RATIO? In addition to a higher average interest rate, SMSFs are also stuck with a lower loan to value ratio (LVR). That is, they must cough up a greater proportion of the purchase price. CANSTAR s analysis has found, based on a $500,000 property, a maximum LVR rate among researched financial institutions of just 80%, compared with a maximum of 100% for retail home loans. Maximum LVR for SMSF Maximum LVR for Individuals Maximum Loan for SMSF Maximum Loan for Individual Difference in Maximum Loan Max 80% 100% $400,000 $500,000 -$100,000 Average 78% 92% $391,304 $461,220 -$69,916 Note the Maximum Loan is based on the Maximum LVR offered and a total property value of $500k. Source: CANSTAR, 29/10/2014 SMSF Lending 3

5 ARE SMSF BORROWERS FLOODING THE MARKET? Currently, self-managed super funds hold approximately $84.5 billion of their $543 billion assets in residential and commercial property with only $19.5 billion of that being in residential property. This super sector has been in the firing line for its part in allegedly inflating house prices by flooding the market. Rather than a flood though, SMSF s role is more like a trickle. In truth private equity remains a small part of the investment market. MINIMISING TAX THE BIGGEST ATTRACTION The main drawcard of borrowing within an SMSF is to save on tax, as well as add value to retirement savings along the way. Negatively gearing an asset gives the opportunity to reduce your super fund s effective tax rate on income generated while in the accumulation phase to below 15%, and in some cases to 0%. The net loss resulting from a negatively geared investment can be applied against other assessable income of your SMSF such as personal concessional and employer contributions. Depending on the size of the loss, the tax rate paid on your concessional contributions can fall below the already concessional rate of 15%. Another attractive advantage is that you can pay down the loan principal faster within super. This is because you have access to existing equity within your SMSF, lowering your loan-to- value ratio (LVR) and concessional tax rates which increase the power of your repayments. You can use borrowed funds to purchase any asset that your SMSF is ordinarily allowed to purchase under superannuation laws. However, the SMSF borrowing rules are perfectly suited to those seeking to invest in real property and less so to gearing into direct shares. SMSFs HERE TO STAY Australians have embraced the concept of self-managed superannuation funds. Currently, there are 534,000 SMSFs with more than one million members. According to the ATO, a body not normally known for its unbridled optimism, this is predicted to rise to a staggering one million SMSFs in due course. And the ATO is in the best position to gauge the health of the sector. Unlike the large super funds, which are regulated by the Australian Prudential Regulation Authority, SMSFs are regulated by the tax office, which ensures they comply with both tax and superannuation regulations. When the sums were last calculated, self-managed super funds had one third of the $1.5 trillion superannuation pie. They were well ahead of retail, industry and government funds - and growing steadily. Another statistic to warm hearts at the ATO is this; of the SMSFs established in the ten years to June 2011, 90% are still operating. It looks like the super genie is out of the bottle and there s no going back. November

6 SMSF MYTHS BUSTED Setting up and running a self-managed super fund is not for everyone. It s a highly regulated legal arrangement that demands to be taken seriously. Think twice about an SMSF if: You won t enjoy being a responsible Trustee You don t have stable employment You are not highly organised with paperwork You regularly miss time schedules You re very close to retirement age, or You re just not a DIY person Myth: Set up a fund to get my hands on the money earlier Busted: It may be tempting when personal or business cashflow slows up, but it s a no-go area. Instead of rolling in dough, you will more likely end up with a hefty penalty or worse, criminal sanctions. Myth: I can help out the kids by leasing our property to them Busted: Wrong. Whilst the intention may be to deal on commercial terms (at arm s length) with the tenant, the fact that they are related prohibits the ability to do so. You will be deemed as providing financial assistance. You will also breach various other aspects of super law, e.g. sole purpose test. Myth: I ll use the loan to make improvements to the property Busted: No, you won t. Improvements can only be made with the SMSF s own resources, but not with borrowed funds. The ATO only allows for borrowing to be used for the acquisition of a single asset purchase, along with any associated costs in repairing or maintaining the asset. That doesn t include improvements. Myth: Auditing is easy. I ll get my regular tax guy to do it Busted: The ATO takes a dim view of tax agents who complete the SMSF tax return as well as the audit. It s an issue of independence. As a trustee you need to be conscious that it is highly probable that an accountant providing the administration of the fund and also the annual audit is in breach of their professional obligations. Managing an SMSF can be a complex task but enlisting the help of a qualified financial advisor will ensure you meet all regulatory and compliance requirements. Setting up the fund correctly at the beginning will save a lot of heartache and hip-pocket pain later on. SMSF Lending 5

7 THE FIVE STAR PRODUCTS Having crunched the numbers and tested 91 loans from 20 providers, CANSTAR has come up with a comprehensive ratings list to determine which loans offer outstanding value for money to self-managed superannuation fund borrowers. We found: 2x five star rated SMSF variable loans 2x five star rated SMSF 1 year fixed loans 2x five star rated SMSF 2 year fixed loans 2x five star rated SMSF 3 year fixed loan 2x five star rated SMSF 5 year fixed loans November

8 SMSF Lending STAR RATING METHODOLOGY What are the CANSTAR SMSF loan star ratings? CANSTAR SMSF loan star ratings is a sophisticated and unique ratings methodology that compares both Cost and Features across SMSF loan products. CANSTAR star ratings represent a shortlist of financial products, enabling consumers to narrow their search to products that have been independently assessed and ranked. What types of products are evaluated by CANSTAR SMSF loan star ratings? Loans for residentially secured property are assessed in the ratings across five loan profiles: SMSF variable SMSF 1 year fixed SMSF 2 year fixed SMSF 3 year fixed SMSF 5 year fixed For commercially secured lending, please refer to SMSF lending institutions for further information. How are the stars calculated? Each home loan reviewed for the CANSTAR SMSF Lending Star Ratings is awarded points for its comparative pricing and for the array of positive features attached to the product. Points are aggregated to achieve a Pricing score and a Feature score. To arrive at the total score CANSTAR applies a weight (w) against the Pricing score and Feature score. This weight will vary from profile to profile and will reflect the relative importance of either costs or features in determining the best SMSF Loan product. This method can be summarised as: TOTAL SCORE = W1 PRICING SCORE + W2 FEATURES SCORE Pricing Score 80-85% Total Cost Feature Score 15-20% Product Eligibility 20% Product Features 80% Indexed Score Product with the best pricing or features will receive a full score for the applicable area SMSF Lending 7

9 The weighting that applies to each profile for the Pricing and Feature Score is as follows: Product Category Pricing Weighting Feature Weighting SMSF Variable 80% 20% SMSF Fixed 85% 15% Pricing Score The Pricing Score is based on the total cost for two scenarios the first scenario involves a $250,000 loan while the second involves a $500,000 loan. Each scenario assumes a 70% Loan to Value (LVR) ratio and a 20 year term. The total cost includes interest cost, and upfront, ongoing and discharge fees. The upfront fee includes the additional costs associated with the loan documentation and the legal review of the SMSF trust deed and bare trust deed. For fixed rate SMSF loans, the cost calculation is based on a minimum 5 year term with at least one rollover of the fixed rate. The following table outlines the loan term and number of rollovers in each fixed loan profile. Product Category Number of Rollovers Loan Term 1 Year Fixed 4 5 years 2 Year Fixed 2 6 years 3 Year Fixed 1 6 years 5 Year Fixed 1 10 years Feature Score The Feature component is assessed across two broad areas: Product Eligibility and Product Features. The total Feature Score takes into account over 140 product features grouped into 14 different categories with weights given to each relevant area. Product Eligibility The Product Eligibility category looks at matters taken into account when a customer first takes out an SMSF loan. Examples of features within the categories are outlined below: Feature Category Feature Weighting Examples of data captured PARTIES 25% PARTICULARS 35% CREDIT CRITERIA 40% SMSF Trustee, Custodian/Property Trustee, Guarantees LVRs, Refinance, borrowing for repairs and maintenance % rental income, years of voluntary contributions November

10 Product Features The Product Feature category looks at positive traits promoting flexibility and convenience for SMSF trustees when looking for an SMSF loan to suit their needs. Examples of features within the feature categories are outlined below: Feature Category SMSF Variable SMSF Fixed Examples of data captured LENDING TERMS 50% 50% SPLIT LOANS 8% 6% Minimum and maximum loan amounts, repayment term options Ability to split the loan, additional costs to split and restrictions on the number of or the loan size of the splits SWITCH FEES 8% 5% Fees to switch between loan types ADDITIONAL REPAYMENTS 7% 5% OFFSET FACILITY 7% - and number of additional repayments Availability and access of offset account SMSF LOAN FEES 6% 5% Refund of fees and arrears fees details LENDING AREAS 4% 4% Lending availability in each state SECURITY REQUIREMENTS 5% 4% LOAN APPROVAL 5% 5% FIXED INTEREST DETAILS - 8% Loan approval requirements e.g. pay slip, overseas income Channel availability, approval turnaround Rate set time, guarantee period, rate lock fees ABILITY TO PRE-PAY INTEREST - 8% Can interest be paid in advance? How many products and financial institutions are analysed? In order to calculate the ratings, CANSTAR analysed 91 SMSF loan products from 20 financial institutions in Australia. Does CANSTAR rate all products available in the market? We endeavour to include the majority of product providers in the market and to compare the product features most relevant to consumers in our ratings. However this process is not always possible and it may be that not every product in the market is included in the rating nor every feature compared that is relevant to you. How often are all the products reviewed for rating purposes? All ratings are fully recalculated once a year based on the latest features offered by each provider. CANSTAR also monitors changes on an ongoing basis. The results are published in a variety of mediums (newspapers, magazines, television, websites, etc). SMSF Lending 9

11 How are the stars awarded? CANSTAR ranks SMSF loans based on value-for-money measures and then awards star ratings according to rank. The number of products awarded each of the 5 to 3 star ratings will ultimately depend on the dispersion of final scores. Scores are awarded to each product on the basis of price and features. The methodology is revised and parameters are updated on a regular basis to make sure the products are analysed using the most up-to-date information capturing all industry developments. Does CANSTAR rate other product areas? CANSTAR also rates the banking and insurance products listed below. These star ratings use similar methodologies to guarantee quality, consistency and transparency. The use of similar star ratings logos also builds consumer recognition of quality products across all categories. Please access the CANSTAR website if you would like to view the latest CANSTAR star ratings reports of interest. 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12 SMSF Loans Star Ratings REPORT DATE:OCTOBER 2014 We endeavour to include the majority of product providers in the market and to compare the product features most relevant to consumers in our ratings. This is not always possible and it may be that not every product in the market is included in the rating nor every feature compared that is relevant to you. SMSF 1 Year Fixed Company Name Product Name Fees (as at 1/09/2014)# Rate Upfront Fees Ongoing Fees ($) Extra Repayments Principal+ or Int Only Max Loan Refinance Borrowing* Personal Corporate BOQ Investment Fixed - SMSF 1 yr 4.65% $ /m Both No Max 75% 80% NAB Tailored Fixed Home Loan SMSF 1 yr 4.89% $3, /m Both No Max 70% 80% Bank of Melbourne Super Fund Fixed 1 yr 5.34% $1, /m Both No Max 72% 80% BankSA Super Fund Fixed 1 yr 5.34% $1, /m Both No Max 72% 80% Big Sky Building Society Limited Recourse Inv Loan Fixed 1 yr 5.45% $1, Nil Both $2,000,000 80% 80% St.George Bank Super Fund Fixed 1 yr 5.34% $1, /m Both No Max 72% 80% AMP Bank SuperEdge Fixed 1 yr 5.74% $2, /m Both $750,000 80% 80% Beyond Bank Fixed Investment SMSF 1 yr 5.39% $2, Nil Both $2,000,000 75% 80% Commonwealth Bank SuperGear - Resi Fixed 1 yr 5.89% $1, /m Both No Max 80% 50% IMB SMSF Fixed 1 yr 5.69% $3, /m Both $1,500,000 80% 80% Macquarie Bank SMSF Property Fixed 1 yr 5.60% $1, Nil Both $500,000 80% 80% RESI Mortgage Corp SMSF Fixed 1 yr 5.39% $1, Nil Both $700,000 70% 70% Westpac Fixed SMSF Investment Property 1 yr 5.79% $1, Nil Both $2,000,000 72% 80% Yellow Brick Road SMSF Property Fixed 1 yr 5.60% $1, Nil Both $500,000 80% 80% your guide to product excellence # POA is price on application. This may vary depending on individual circumstances. * for repairs and maintenance as per Superannuation Industry (Supervision) Act 1993 Report Date: October 2014 (All information correct as at 1 September 2014) SMSF Loans Star Rating PAGE 1

13 SMSF Loans Star Ratings REPORT DATE:OCTOBER 2014 We endeavour to include the majority of product providers in the market and to compare the product features most relevant to consumers in our ratings. This is not always possible and it may be that not every product in the market is included in the rating nor every feature compared that is relevant to you. SMSF 1 Year Fixed Company Name Product Name Fees (as at 1/09/2014)# Rate Upfront Fees Ongoing Fees ($) Extra Repayments Principal+ or Int Only Max Loan Refinance Borrowing* Personal Corporate bcu SMSF Fixed P&I 1 yr 6.49% $1, Nil P+I $2,500,000 80% 80% bcu SMSF Fixed IO 1 yr 6.49% $1, Nil IO $2,500,000 80% 80% Hume Bank SMSF Fixed 1 yr 6.25% $3, Nil Both No Max 70% 70% your guide to product excellence # POA is price on application. This may vary depending on individual circumstances. * for repairs and maintenance as per Superannuation Industry (Supervision) Act 1993 Report Date: October 2014 (All information correct as at 1 September 2014) SMSF Loans Star Rating PAGE 2

14 SMSF Loans Star Ratings REPORT DATE:OCTOBER 2014 We endeavour to include the majority of product providers in the market and to compare the product features most relevant to consumers in our ratings. This is not always possible and it may be that not every product in the market is included in the rating nor every feature compared that is relevant to you. SMSF 2 Year Fixed Company Name Product Name Fees (as at 1/09/2014)# Rate Upfront Fees Ongoing Fees ($) Extra Repayments Principal+ or Int Only Max Loan Refinance Borrowing* Personal Corporate BOQ Investment Fixed - SMSF 2 yrs 4.79% $ /m Both No Max 75% 80% NAB Tailored Fixed Home Loan SMSF 2 yrs 4.94% $3, /m Both No Max 70% 80% Bank of Melbourne Super Fund Fixed 2 yrs 5.34% $1, /m Both No Max 72% 80% BankSA Super Fund Fixed 2 yrs 5.34% $1, /m Both No Max 72% 80% Big Sky Building Society Limited Recourse Inv Loan Fixed 2 yrs 5.49% $1, Nil Both $2,000,000 80% 80% St.George Bank Super Fund Fixed 2 yrs 5.34% $1, /m Both No Max 72% 80% Westpac Fixed SMSF Investment Property 2 yrs 5.54% $1, Nil Both $2,000,000 72% 80% AMP Bank SuperEdge Fixed 2 yrs 5.64% $2, /m Both $750,000 80% 80% Beyond Bank Fixed Investment SMSF 2 yrs 5.44% $2, Nil Both $2,000,000 75% 80% Commonwealth Bank SuperGear - Resi Fixed 2 yrs 5.89% $1, /m Both No Max 80% 50% IMB SMSF Fixed 2 yrs 5.64% $3, /m Both $1,500,000 80% 80% Macquarie Bank SMSF Property Fixed 2 yrs 5.65% $1, Nil Both $500,000 80% 80% RESI Mortgage Corp SMSF Fixed 2 yrs 5.29% $1, Nil Both $700,000 70% 70% Yellow Brick Road SMSF Property Fixed 2 yrs 5.65% $1, Nil Both $500,000 80% 80% your guide to product excellence # POA is price on application. This may vary depending on individual circumstances. * for repairs and maintenance as per Superannuation Industry (Supervision) Act 1993 Report Date: October 2014 (All information correct as at 1 September 2014) SMSF Loans Star Rating PAGE 3

15 SMSF Loans Star Ratings REPORT DATE:OCTOBER 2014 We endeavour to include the majority of product providers in the market and to compare the product features most relevant to consumers in our ratings. This is not always possible and it may be that not every product in the market is included in the rating nor every feature compared that is relevant to you. SMSF 2 Year Fixed Company Name Product Name Fees (as at 1/09/2014)# Rate Upfront Fees Ongoing Fees ($) Extra Repayments Principal+ or Int Only Max Loan Refinance Borrowing* Personal Corporate bcu SMSF Fixed P&I 2 yrs 6.59% $1, Nil P+I $2,500,000 80% 80% bcu SMSF Fixed IO 2 yrs 6.59% $1, Nil IO $2,500,000 80% 80% Hume Bank SMSF Fixed 2 yrs 6.20% $3, Nil Both No Max 70% 70% your guide to product excellence # POA is price on application. This may vary depending on individual circumstances. * for repairs and maintenance as per Superannuation Industry (Supervision) Act 1993 Report Date: October 2014 (All information correct as at 1 September 2014) SMSF Loans Star Rating PAGE 4

16 SMSF Loans Star Ratings REPORT DATE:OCTOBER 2014 We endeavour to include the majority of product providers in the market and to compare the product features most relevant to consumers in our ratings. This is not always possible and it may be that not every product in the market is included in the rating nor every feature compared that is relevant to you. SMSF 3 Year Fixed Company Name Product Name Fees (as at 1/09/2014)# Rate Upfront Fees Ongoing Fees ($) Extra Repayments Principal+ or Int Only Max Loan Refinance Borrowing* Personal Corporate BOQ Investment Fixed - SMSF 3 yrs 4.79% $ /m Both No Max 75% 80% Westpac Fixed SMSF Investment Property 3 yrs 5.54% $1, Nil Both $2,000,000 72% 80% Bank of Melbourne Super Fund Fixed 3 yrs 5.44% $1, /m Both No Max 72% 80% BankSA Super Fund Fixed 3 yrs 5.44% $1, /m Both No Max 72% 80% NAB Tailored Fixed Home Loan SMSF 3 yrs 5.15% $3, /m Both No Max 70% 80% St.George Bank Super Fund Fixed 3 yrs 5.44% $1, /m Both No Max 72% 80% AMP Bank SuperEdge Fixed 3 yrs 5.64% $2, /m Both $750,000 80% 80% Beyond Bank Fixed Investment SMSF 3 yrs 5.64% $2, Nil Both $2,000,000 75% 80% Big Sky Building Society Limited Recourse Inv Loan Fixed 3 yrs 5.69% $1, Nil Both $2,000,000 80% 80% Commonwealth Bank SuperGear - Resi Fixed 3 yrs 5.89% $1, /m Both No Max 80% 50% IMB SMSF Fixed 3 yrs 5.89% $3, /m Both $1,500,000 80% 80% Macquarie Bank SMSF Property Fixed 3 yrs 5.80% $1, Nil Both $500,000 80% 80% RESI Mortgage Corp SMSF Fixed 3 yrs 5.39% $1, Nil Both $700,000 70% 70% Yellow Brick Road SMSF Property Fixed 3 yrs 5.80% $1, Nil Both $500,000 80% 80% your guide to product excellence # POA is price on application. This may vary depending on individual circumstances. * for repairs and maintenance as per Superannuation Industry (Supervision) Act 1993 Report Date: October 2014 (All information correct as at 1 September 2014) SMSF Loans Star Rating PAGE 5

17 SMSF Loans Star Ratings REPORT DATE:OCTOBER 2014 We endeavour to include the majority of product providers in the market and to compare the product features most relevant to consumers in our ratings. This is not always possible and it may be that not every product in the market is included in the rating nor every feature compared that is relevant to you. SMSF 3 Year Fixed Company Name Product Name Fees (as at 1/09/2014)# Rate Upfront Fees Ongoing Fees ($) Extra Repayments Principal+ or Int Only Max Loan Refinance Borrowing* Personal Corporate bcu SMSF Fixed IO 3 yrs 6.64% $1, Nil IO $2,500,000 80% 80% bcu SMSF Fixed P&I 3 yrs 6.64% $1, Nil P+I $2,500,000 80% 80% Hume Bank SMSF Fixed 3 yrs 6.30% $3, Nil Both No Max 70% 70% your guide to product excellence # POA is price on application. This may vary depending on individual circumstances. * for repairs and maintenance as per Superannuation Industry (Supervision) Act 1993 Report Date: October 2014 (All information correct as at 1 September 2014) SMSF Loans Star Rating PAGE 6

18 SMSF Loans Star Ratings REPORT DATE:OCTOBER 2014 We endeavour to include the majority of product providers in the market and to compare the product features most relevant to consumers in our ratings. This is not always possible and it may be that not every product in the market is included in the rating nor every feature compared that is relevant to you. SMSF 5 Year Fixed Company Name Product Name Fees (as at 1/09/2014)# Rate Upfront Fees Ongoing Fees ($) Extra Repayments Principal+ or Int Only Max Loan Refinance Borrowing* Personal Corporate BOQ Investment Fixed - SMSF 5 yrs 5.09% $ /m Both No Max 75% 80% Commonwealth Bank SuperGear - Resi Fixed 5 yrs 6.09% $1, /m Both No Max 80% 50% Bank of Melbourne Super Fund Fixed 5 yrs 5.54% $1, /m Both No Max 72% 80% BankSA Super Fund Fixed 5 yrs 5.54% $1, /m Both No Max 72% 80% NAB Tailored Fixed Home Loan SMSF 5 yrs 5.79% $3, /m Both No Max 70% 80% St.George Bank Super Fund Fixed 5 yrs 5.54% $1, /m Both No Max 72% 80% Westpac Fixed SMSF Investment Property 5 yrs 6.04% $1, Nil Both $2,000,000 72% 80% AMP Bank SuperEdge Fixed 5 yrs 6.04% $2, /m Both $750,000 80% 80% Beyond Bank Fixed Investment SMSF 5 yrs 6.24% $2, Nil Both $2,000,000 75% 80% Big Sky Building Society Limited Recourse Inv Loan Fixed 5 yrs 6.09% $1, Nil Both $2,000,000 80% 80% Hume Bank SMSF Fixed 5 yrs 6.70% $3, Nil Both No Max 70% 70% IMB SMSF Fixed 5 yrs 6.19% $3, /m Both $1,500,000 80% 80% Macquarie Bank SMSF Property Fixed 5 yrs 6.20% $1, Nil Both $500,000 80% 80% RESI Mortgage Corp SMSF Fixed 5 yrs 5.79% $1, Nil Both $700,000 70% 70% Yellow Brick Road SMSF Property Fixed 5 yrs 6.20% $1, Nil Both $500,000 80% 80% your guide to product excellence # POA is price on application. This may vary depending on individual circumstances. * for repairs and maintenance as per Superannuation Industry (Supervision) Act 1993 Report Date: October 2014 (All information correct as at 1 September 2014) SMSF Loans Star Rating PAGE 7

19 SMSF Loans Star Ratings REPORT DATE:OCTOBER 2014 We endeavour to include the majority of product providers in the market and to compare the product features most relevant to consumers in our ratings. This is not always possible and it may be that not every product in the market is included in the rating nor every feature compared that is relevant to you. SMSF 5 Year Fixed Company Name Product Name Fees (as at 1/09/2014)# Rate Upfront Fees Ongoing Fees ($) Extra Repayments Principal+ or Int Only Max Loan Refinance Borrowing* Personal Corporate bcu SMSF Fixed P&I 5 yrs 7.14% $1, Nil P+I $2,500,000 80% 80% bcu SMSF Fixed IO 5 yrs 7.14% $1, Nil IO $2,500,000 80% 80% your guide to product excellence # POA is price on application. This may vary depending on individual circumstances. * for repairs and maintenance as per Superannuation Industry (Supervision) Act 1993 Report Date: October 2014 (All information correct as at 1 September 2014) SMSF Loans Star Rating PAGE 8

20 SMSF Loans Star Ratings REPORT DATE:OCTOBER 2014 We endeavour to include the majority of product providers in the market and to compare the product features most relevant to consumers in our ratings. This is not always possible and it may be that not every product in the market is included in the rating nor every feature compared that is relevant to you. SMSF Variable Loans Company Name Product Name Fees (as at 1/09/2014)# Rate Upfront Fees Ongoing Fees ($) Repayments Principal+ or Int only Max Loan 100% offset Refinance Borrowing* Personal Corporate Commonwealth Bank SuperGear - Resi Variable 5.90% $1, /m Both No Max 80% 50% NAB Tailored Variable SMSF 5.88% $3, /m Both No Max 70% 80% Bendigo Bank Self Managed Super Fund Variable POA $3, /a Both No Max 70% 70% Big Sky Building Society Limited Recourse Investment Loan 5.88% $1,220 Nil Both $2,000,000 80% 80% Homeloans Classic SMSF 5.74% $2,724 Nil Both $500,000 80% 80% State Custodians SMSF Loan 5.59% $1,705 Nil Both $500,000 80% 80% AMP Bank SuperEdge Variable 6.00% $2, /m Both $750,000 80% 80% Bank of Melbourne Super Fund Variable 5.90% $1, /m Both $2,000,000 72% 80% BankSA Super Fund Variable 5.97% $1, /m Both $2,000,000 72% 80% bcu SMSF Variable P&I 70% 5.78% $1,250 Nil P+I $2,500,000 80% 80% bcu SMSF Variable IO 70% 5.78% $1,250 Nil IO $2,500,000 80% 80% BOQ Investment Standard Variable - SMSF 6.01% $ /m Both No Max 75% 80% IMB SMSF Variable 5.99% $3, /m Both $1,500,000 80% 80% Macquarie Bank SMSF Property Variable 5.80% $1,930 Nil Both $500,000 80% 80% RESI Mortgage Corp SMSF Variable 5.94% $1,584 Nil Both $700,000 70% 70% St.George Bank Super Fund Variable 5.99% $1, /m Both $2,000,000 72% 80% your guide to product excellence # POA is price on application. This may vary depending on individual circumstances * for repairs and maintenance as per Superannuation Industry (Supervision) Act 1993 Report Date: September, 2014 (All information correct as at 1 September 2014) SMSF Loans Star Rating PAGE 1

21 SMSF Loans Star Ratings REPORT DATE:OCTOBER 2014 We endeavour to include the majority of product providers in the market and to compare the product features most relevant to consumers in our ratings. This is not always possible and it may be that not every product in the market is included in the rating nor every feature compared that is relevant to you. SMSF Variable Loans Company Name Product Name Fees (as at 1/09/2014)# Rate Upfront Fees Ongoing Fees ($) Repayments Principal+ or Int only Max Loan 100% offset Refinance Borrowing* Personal Corporate Victoria Teachers Mutual Bank SMSF Variable Loan 5.94% $1, /a Both No Max 80% 80% Westpac Variable SMSF Investment Property 6.26% $1,500 Nil Both $2,000,000 72% 80% Yellow Brick Road SMSF Property Variable 5.80% $1,930 Nil Both $500,000 80% 80% bcu SMSF Variable P&I 80% 6.68% $1,250 Nil P+I $2,500,000 80% 80% bcu SMSF Variable IO 80% 6.68% $1,250 Nil IO $2,500,000 80% 80% Beyond Bank Variable Investment SMSF 6.79% $2,653 Nil Both $2,000,000 75% 80% Hume Bank SMSF Variable 6.75% $3,989 Nil Both No Max 70% 70% your guide to product excellence # POA is price on application. This may vary depending on individual circumstances * for repairs and maintenance as per Superannuation Industry (Supervision) Act 1993 Report Date: September, 2014 (All information correct as at 1 September 2014) SMSF Loans Star Rating PAGE 2