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The lender’s new EasyRefi process allows eligible residential SMSF refinance applications to be assessed using repayment history rather than a traditional serviceability assessment.
The policy is available for dollar-for-dollar refinances with corporate trustees only, where the proposed loan results in lower repayments.
Applications involving additional funds or equity release, or borrowers with missed repayments in the previous 12 months, will continue to be assessed under RedZed’s standard SMSF lending policy.
Existing legal advice can generally be reused where the SMSF structure remains unchanged, while RedZed has also waived its standard legal fees to further simplify the refinance process.
Refinancing takes centre stage
Nathan Taddeo, RedZed's general manager of sales and strategic partnerships said the lender developed EasyRefi as the SMSF lending market entered a period of change ahead of the ban on SMSF residential lending, starting 10 August.
Taddeoadded that the impending ban would fundamentally reshape the SMSF lending market rather than bring it to an end, noting RedZed had experienced strong growth since entering the sector two years ago.
“Overall, confidence in SMSF lending has grown significantly, which is why we have seen strong growth in this segment,” he said.
“However, the impending ban on new SMSF residential property loans is expected to prompt some lenders to scale back or exit the sector. This will likely drive refinancing activity as borrowers look to move to lenders who continue to support SMSF lending.
“We saw this market shift as an opportunity to not only create a simpler, more refined SMSF refinancing process to support our broker partners and their customers, but to offer competitive rates starting from 6.94 per cent p.a. to deliver real value.”
Indeed, other lenders, including La Trobe, have also responded to the changing market by introducing their own streamlined SMSF refinance pathways, while Bluestone recently told Broker Daily it viewed the SMSF refinance market as an untapped opportunity for brokers.
Back-book opportunity
Taddeo said EasyRefi was designed to help brokers unlock opportunities within their existing client bases by simplifying what had traditionally been a complex refinance process.
Rather than requiring extensive documentation around super contributions, rental income, and trust structures, eligible applications are primarily assessed on the borrower’s repayment conduct over the previous 12 months. Existing legal advice can generally be reused where the SMSF structure remains unchanged, while RedZed also waives its standard legal fees.
“EasyRefi is designed to help brokers easily refinance SMSF loans in their back books to a more competitive rate,” Taddeo said.
“Many brokers have SMSF loans sitting in their back books that may not have been reviewed for some time. While a refinance doesn’t necessarily improve cash directly in the borrower’s pocket today, it can provide significant financial benefit through interest savings.
“For brokers, this creates another avenue to support clients, strengthen relationships, generate business and ultimately deliver better customer outcomes.”
Commercial the next frontier
While EasyRefi focuses on existing residential SMSF borrowers, Taddeo said he expected commercial property lending to become the next growth area for the sector.
“Commercial property has always been a strong SMSF investment option and many would argue it is the asset class SMSFs were originally intended to support,” he said.
“Given the imminent ban on new SMSF loans for residential property, investors who may have previously considered purchasing a residential property through their SMSF may begin considering commercial assets instead, where appropriate and where their financial circumstances allow.
“In addition to our EasyRefi offer, RedZed’s commercial SMSF loan product is an attractive option for self-employed clients, allowing them to lease and operate from commercial property owned by their SMSF instead of paying rent to a third party.
“This can help with portfolio diversification, asset protection and potential future wealth generation.”
[Related: SMSF borrowing ban puts thousands of building contracts at risk]
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