SMSF Loans

SMSF loans for residential and commercial property

Current Lending Policy
(Residential Investment Property)

Maximum LVR where an individual is trustee of the holding trust - 72%
Maximum LVR where company is trustee of the holding trust - 80%
Serviceability of the new loan must come from proposed rental income, super contributions and/or existing earnings within the super fund.

How does it Work?

Your SMSF wants to buy property (either residential, rural or commercial real estate), but it does not have enough funds for the full purchase. The SMSF can now make an equity contribution on the property and borrow the remainder of the funds to complete the purchase

The Benefits of using a SMSF to Purchase Real Estate

Your SMSF can acquire property worth more than its available funds through the benefits of gearing SMSF assets are secure, as the mortgage lender does not have recourse to your SMSF's other assets in the event of default
Your self managed super fund receives all income and capital growth even if the property has not been paid off
Your SMSF can use income generated from the property to help pay off the home loan
Interest from the home loan may be claimed as tax deductions by the self managed super fundand can potentially reduce your SMSF's tax liability

Features of an SMSF Home Loan

The self managed super fund must purchase property from an unrelated party. Purchases must be arms length
Investment in property must be consistent with your SMSF investment strategy
In the event of a home loan default, the mortgage lender only has recourse to the property used as security and cannot claim any other assets in the SMSF
The property is held in trust for the SMSF, which is entitled to its income
Your SMSF makes the home loan repayments. After the home loan is repaid in full, the legal ownership of the investment property is transferred to the SMSF
You can choose any kind of property including residential, commercial, rural, industrial or retailproperty
The legal owner of the real estate will be the Property Trustee
The beneficial owner of the real estate is the SMSF
As mortgage lender has no recourse to the other assets in the SMSF, this provides the SMSF with protection for its other assets
The home loan used to purchase the property through the SMSF are personally guaranteed by the member/s of the SMSF
SMSFs can deal with the property in the same way as investors would deal with 'normal' investment properties outside of the self managed super fun. For example, you can still lease out the property, renovate, make repairs etc. However, this is subject to the terms and conditions of the home loan
Rent is paid directly to the SMSF. Home loan repayments are made in the ordinary way from theSMSF
The SMSF can pay out or reduce the home loan at any time - subject to the terms of the relevanthome loan
When the home loan is paid out in full, title to the property can be transferred to the self managed super fund or the property
The trustee can continue as registered proprietor

Talk to us about your SMSF loan

Frequently Asked Questions

Yes, a Self-Managed Super Fund (SMSF) can borrow money under certain conditions. This is typically done through a limited recourse borrowing arrangement (LRBA), which allows the SMSF to purchase an asset—such as real estate—while limiting the lender's recourse to that asset only, should the SMSF default on the loan. It’s important to ensure that the borrowing complies with the regulations set by the Australian Taxation Office (ATO) and that the loan is for investment purposes that align with the SMSF’s investment strategy.
At Rosh Partners, we can assist you in understanding the borrowing process for SMSFs and help you explore suitable financing options to meet your investment goals.
A Limited Recourse Borrowing Arrangement (LRBA) is a financing structure that allows a Self-Managed Super Fund (SMSF) to borrow money to purchase an investment asset, such as property, while protecting the SMSF's other assets from the lender's claims in the event of default. Under an LRBA, if the SMSF fails to repay the loan, the lender can only recoup their losses from the specific asset purchased with the borrowed funds, rather than from other assets within the SMSF. This arrangement is designed to ensure that the risks are contained and that the SMSF's investment strategy remains compliant with regulatory requirements.
At Rosh Partners, we can help you navigate the complexities of LRBAs and ensure you understand how they fit into your SMSF investment strategy.
Yes, a Self-Managed Super Fund (SMSF) can borrow to build a property, provided it complies with the regulations set by the Australian Taxation Office (ATO). This is typically done through a Limited Recourse Borrowing Arrangement (LRBA), which allows the SMSF to finance the construction of an investment property while limiting the lender's recourse to the constructed asset alone. It’s important to ensure that the construction aligns with the SMSF's investment strategy and that all borrowed funds are used for investment purposes that benefit the fund.
At Rosh Partners, we can guide you through the process of borrowing to build within your SMSF and help you explore suitable financing options tailored to your investment goals.
Yes, a Self-Managed Super Fund (SMSF) can use the equity in a property already owned by the fund as a deposit to purchase another property. This is often done through a Limited Recourse Borrowing Arrangement (LRBA), allowing the SMSF to leverage existing assets to finance new investments. However, it's essential to ensure that the new property aligns with the SMSF's investment strategy and complies with regulatory requirements set by the Australian Taxation Office (ATO).
At Rosh Partners, we can help you understand the implications of using equity in your SMSF and assist you in navigating the borrowing process to maximize your investment opportunities.
Getting your finance pre-approved before you make any decisions is always a very good idea. While not strictly required, getting a home loan pre-approval can be highly beneficial, especially in a competitive housing market. Here’s why:
1. Know Your Budget
- A pre-approval provides you with a clear understanding of how much you can borrow based on your financial situation. This helps you focus your property search within your price range, saving time and preventing disappointment.
2. Strengthen Your Position as a Buyer
- Pre-approval shows sellers and real estate agents that you're a serious buyer with financing already conditionally secured. This can make your offer more attractive and give you an edge over buyers who haven’t been pre-approved.
3. Avoid Surprises
- During the pre-approval process, your lender will assess your financials (income, savings, credit history) to give you an accurate borrowing estimate. This way, you can address any issues or discrepancies early on, reducing the chance of surprises later.
4. Faster Loan Approval
- Having pre-approval can speed up the loan approval process once you’ve found the right property. Since much of the groundwork is already done, the final approval can be quicker and smoother, which is especially helpful when dealing with tight settlement timelines.
5. No Obligation
- A pre-approval is typically valid for 3-6 months, and while it gives you a better idea of your borrowing power, you're not locked into a particular lender or loan until you proceed with a formal application. This gives you flexibility if your circumstances change.
When Might You Not Need Pre-Approval?
- In certain situations, such as if you're making an unconditional cash offer or if you’re a returning buyer with extensive equity, pre-approval may not be essential. However, even in these cases, knowing your borrowing capacity is still helpful.
Final Thoughts: While it’s not mandatory, getting pre-approval can provide peace of mind, clarity, and a competitive edge when buying a home. It’s a smart step in the home-buying process, especially if you’re serious about securing your next property. A mortgage broker can guide you through the pre-approval process and help you find the best loan options based on your needs.