Bridging Loan. The Clients:
Mr and Mrs Selassie, retired in their early 80s, own a $1m home in Melbourne and a $2m commercial property in Brunswick, VIC. They took out a reverse mortgage on their property but realized it was not suitable for them.
The commercial property needs urgent structural changes and refit, and they have no income. They are seeking a $150,000 loan through their SMSF to complete the necessary work.
The Problem:
Borrowing via SMSF is possible. However, the rule of thumb is that structural changes are not allowed. Their reverse mortgages will eat away at the equity of their home that they wished to leave to their only granddaughter. They cannot redraw further equity from their home and that they were paying a snowballing rate of 8%.
The Solution:
La Trobe refinanced a reverse mortgage ($400,000) and added an additional $150,000 to the loan to complete work on a commercial building. La Trobe were happy that they had enough security in the home $1m, as well as a strong exit strategy in selling the commercial property, that they lent them the $550,000 needed. They were given a 24-month term product, no repayments, 7.89% rate, with a discount for paying off the loan early.
Mr and Mrs Selassie will own their own property outright and have approximately $1.5m in cash to cushion their retirement and fully enjoy their remaining years.
