Financial Health Check for a Medical Professional

Success Factors

  • Crunching several scenarios to find the perfect balance between borrowing capacity, LVR, loan features, lender service, rate and fees
  • Cross checking credit assistance solutions with Accountant to ensure they were tax efficient
  • Rigorous pre submission scenario and policy workshopping with the bank BDM and credit manager
  • Using 4 years of history (instead of 2) to establish the desired scenario as submitted should be approved
  • Requesting exceptions to policy from a commercial viewpoint with appropriate mitigants that address the lenders concerns before they were even raised

The Situation

  • Looking to settle first off the plan property purchased in SMSF
  • Also held investment properties outside of SMSF
  • Very busy medical professional

Our client is an extremely talented medical professional and owner of a busy medical practice. An avid property investor he was aiming for the next level with the settlement of his first property inside his SMSF. He was unhappy with his current relationship manager who was not responsive and very unhelpful. After committing a 10% deposit over 2 years ago the window to settle was quickly closing. Unfortunately in that time the market had turned dramatically and our client needed some emergency options!

The Challenges

The challenges we faced with this deal were:

  • Valuation risk – the property was an off the plan in a high-risk postcode
  • Single member fund limits contributions for servicing
  • Self employed policy
  • Lumpy contributions over the last 4 years, lowest to highest varied by 400%
  • Varying SMSF running expenses
  • Additional lump sum contribution required to top up fund to meet the current deposit requirements


The two prerequisites for any loan approval are valuation and serviceability. For an SMSF loan the “income” is the member’s contribution to the SMSF and the “expenses” are the accountancy fees. Lenders will take a conservative view on the last 2 years or more and in our client’s case, over the last 4 years the contributions and expenses varied by as much as 500% and 300% respectively.

Since our client got advice on SMSF borrowing over 2 years ago, the lender policy and property market has changed so dramatically that he was facing a $65,000 shortfall for settlement. This was a challenge to solve as a lump sum contribution would have tax implications not to mention an unexpected drain on his savings.

The Results

  • Worked with Accountant to devise a tax efficient lump sum contribution strategy – related party loan funded by cash out against investment properties held in personal name
  • Obtained exception to have $25,000 included as contributions for servicing – we showed client’s current YTD contributions from SMSF cash account to argue the 5 year average is substantially above the amount we were requesting
  • Mitigated varying SMSF running expenses with accountant letter explaining previous charges were due to higher cost of initial setup, ongoing cost to be lower. The lower was used for servicing.
  • For all 3 meetings, we travelled to client’s place of work which was located inside the airport terminal
  • Settled with highest tier SMSF lender at the time
  • Added a bonus of five-digit rate savings per year from refinancing properties outside of SMSF ($10,065)

We firstly resolved servicing by presenting a 5 year history of contributions, though the amounts varied, the extensive history presented a strong case to accept the average which was sufficient for the loan amount that would be the maximum LVR anyway. Knowing the loan amount we were able to engage with our client’s accountant to devise a tax effective plan to fill the shortfall.

A refinance of his properties outside SMSF released enough equity to fill the shortfall and even saved our client $10,000 a year in interest. His accountant set up a structure for the funds to be lent to the SMSF from his personal name.

Consequently, there was a smooth parallel execution of settling the property inside SMSF property with the refinance of properties outside SMSF.