What is an SMSF loan?
An SMSF loan lets a self-managed super fund borrow to buy a single property through a limited recourse borrowing arrangement. The property is held in a separate holding trust until the loan is repaid, and the lender’s claim is limited to that property. Strict super rules apply, so trustees need licensed advice first.
We arrange credit only; we don’t give financial, super or financial product advice. Speak to a licensed financial adviser before your fund borrows.
Who it suits
- SMSF trustees who have received advice from a licensed financial adviser that borrowing fits the fund’s investment strategy.
- Business owners considering their fund buying the commercial premises their business operates from.
- Funds with enough balance and contributions to cover repayments, costs and a cash buffer.
- Trustees who understand that the property can’t be lived in or rented by members or their relatives, except for business real property under specific rules.
Documents lenders ask for
- The SMSF trust deed and the holding (bare) trust deed.
- The fund’s investment strategy, showing that borrowing has been considered.
- Recent SMSF financial statements, tax returns and fund bank statements.
- Details of member contributions and any lease, including a lease to a related business.
- Identification for every trustee or director of the corporate trustee.
Trade-offs and risks
- Fewer lenders offer SMSF loans, and pricing and deposit requirements are usually stricter than for personal loans.
- The fund must keep enough cash to meet repayments and costs. A long vacancy or a drop in contributions can strain it.
- The property generally can’t be improved with borrowed money, and set-up and ongoing costs are higher than holding property personally.
- Breaching super rules can bring serious tax and legal consequences for trustees.
- Holding one large asset can leave the fund poorly diversified.
How we're paid
- Lenders usually pay us a commission when a loan settles, and some also pay an ongoing trail commission while the loan stays open.
- We tell you what we expect to receive, and from whom, in our credit quote and credit proposal before you apply.
- If a fee from you applies to your situation, it is set out in writing before you go ahead. There is no obligation to proceed.
Related guides
Official information
SMSF loans FAQs
General information only. It does not take your objectives, financial situation or needs into account and is not financial product, tax or legal advice. Lending criteria, fees and charges apply. Super, Centrelink and aged-care fee advice is referred to a licensed financial adviser. Ding Financial Pty Ltd t/a Local Knowledge Finance is a Corporate Authorised Credit Representative 517980 of Global Mutual Funds Pty Ltd (ACL 222640).
Talk to a broker about SMSF lending
Once your adviser has confirmed borrowing suits your fund, we can explain which lender policies may fit the property and structure.