SMSF Property Loans | Specialist Lending Experts

Q: What is SMSF Lending?

SMSF lending allows a self-managed super fund to borrow to purchase property or other investment assets as part of a retirement strategy. SMSF loans must comply with ATO rules and are typically structured under a Limited Recourse Borrowing Arrangement (LRBA), where the lender’s recourse is limited to the specific asset being purchased.

Q: Who is eligible for SMSF lending?

Eligibility depends on your fund being established and operational, having sufficient balance and contributions to demonstrate serviceability, and purchasing an asset that aligns with SMSF investment rules. Lenders have different policies, and SMSF borrowing rules are strict, so it’s important to confirm eligibility with your broker and relevant advisors before proceeding.

Q: What are the costs involved with SMSF loans?

SMSF loans can involve application and establishment fees, ongoing administration costs, and potentially exit fees. Interest rates are often higher than standard home loans. Property purchases may involve stamp duty, LRBA setup and legal costs, and commercial property may involve GST considerations depending on how the purchase is structured.

Q: What are the benefits of an SMSF loan?

Benefits can include tax treatment within super, direct control over a property investment, and the ability to use leverage within the fund (with associated risk). SMSF borrowing may not impact your personal borrowing capacity, and LRBA structures can protect other super assets by limiting lender recourse to the purchased asset.

Q: Are there any risks or important considerations?

SMSF lending requires correct LRBA and trustee setup, and rules are strict. Costs and rates are typically higher, and deposit requirements may be higher with no LMI. Ongoing compliance and contributions are important to service the loan, and commercial property can have GST considerations. Independent legal and financial advice is recommended before proceeding.

How We Guide
Your SMSF
Investment

Purchasing property through your self-managed super fund (SMSF) requires specialist knowledge and careful structuring to ensure compliance. We work closely with you to navigate the unique lending criteria, documentation requirements, and regulatory obligations involved in SMSF loans.

Our role is to source the right lender, structure your application correctly, and manage the entire process from pre-approval through to settlement. With our expertise, you can confidently grow your retirement wealth through property investment while staying fully compliant.

FAQs

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What is SMSF Lending?

SMSF lending allows your self-managed super fund to borrow money to purchase property or other investment assets as part of your retirement strategy. Unlike traditional home loans, SMSF loans are structured to comply with Australian Taxation Office (ATO) regulations governing self-managed super funds. The loan is secured against the asset being purchased, and your SMSF is responsible for repaying the loan with interest. Most SMSF loans require a Limited Recourse Borrowing Arrangement (LRBA) which is a special trust structure that holds the asset and protects your other super assets if the loan defaults, as the lender's only recourse is to the specific asset held in the LRBA.

Who is eligible for SMSF lending?

To qualify for SMSF lending, your fund must meet certain criteria:

- Fund establishment: Your SMSF must be established and operational (we can begin the process immediately after setup)

- Minimum balance: While some lenders require as little as $50,000, we generally recommend $200,000-$250,000 for a smoother process

- Repayment capacity: Your SMSF must demonstrate financial capacity to service the loan through a sound investment strategy

- Suitable investment: The asset must align with SMSF investment rules and the loan must be secured against it

Lenders may have additional requirements, it must also be noted that ATO rules are strict regarding SMSF borrowing. We recommend consulting with us and your financial advisor to ensure your fund meets all eligibility criteria before proceeding.

What are the costs involved with SMSF loans?

SMSF loans typically come with several costs to consider:

- Fees: Application fees, establishment fees, ongoing administration fees, and potential exit fees

- Interest rates: SMSF loans generally have higher interest rates than standard home loans due to their specialized nature and the lender not having government guarantee protection

- Taxes: Stamp duty applies to property purchases (and must be carefully managed to avoid "double stamping")

- Setup costs: Legal and trustee establishment costs for the LRBA structure

- GST: Commercial properties may attract GST unless purchased as a "going concern" with an existing lease

We'll help you understand the full cost picture and whether SMSF lending makes financial sense for your retirement strategy.

What are the benefits of an SMSF loan?

SMSF property investment offers several compelling advantages:

‍Tax benefits:
- Concessional contributions and income are taxed at lower rates than your marginal tax rate, potentially allowing faster loan repayment

- Capital gains receive a one-third discount if the asset is held for over 12 months

- Zero capital gains tax if the asset is sold during pension phase

‍Other key benefits:
- Preserved borrowing capacity: SMSF borrowing typically doesn't impact your personal borrowing capacity, allowing you to build wealth through property while maintaining the ability to purchase your own home

- Direct property control: Unlike retail super funds, SMSFs let you invest in direct property with greater control over rent, maintenance, and sale decisions

- Leverage potential: Property investment through leverage can magnify returns compared to other super investments (though it also magnifies risk)Asset protection: The LRBA structure protects your other super assets if issues arise with the property loan

Are there any risks or important considerations?

While SMSF lending offers benefits, there are important considerations:

‍Structural requirements:
- The bare trustee and LRBA must be set up correctly at exchange to avoid costly "double stamping" events

- Independent legal and financial advice is required before proceeding

‍Financial considerations:

- No lenders mortgage insurance (LMI) is available, you must have at least a 20% deposit plus setup costs

- Ideally, your SMSF has two or more members making consistent maximum concessional contributions

- Higher interest rates and fees compared to traditional home loans

‍Ongoing obligations:

- Strict ATO compliance requirements

- Regular contributions needed to service the loan

- Commercial properties may incur GST if not purchased as a going concern

We work closely with you and your advisors to ensure your SMSF loan is structured correctly and aligns with your long-term retirement goals.

GROW YOUR SUPER
THROUGH PROPERTY

How We Guide
Your SMSF
Investment

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