Accredited SMSF Lending Specialist
What is an SMSF Loan?
An SMSF loan is a type of borrowing arrangement that allows a Self-Managed Super Fund (SMSF) to purchase an investment property or other eligible assets. The loan is taken out by the SMSF, and any returns—such as rental income or capital gains—are directed back into the fund to help grow your retirement savings. SMSF loans are strictly regulated and must comply with superannuation laws, ensuring that all investments are made solely to benefit fund members in retirement.
How does an SMSF Loan work?
SMSF loans are structured through a Limited Recourse Borrowing Arrangement (LRBA). Under this arrangement, the SMSF sets up a separate trust (often called a bare or custodian trust) to legally hold the purchased property on behalf of the fund until the loan is repaid. The lender’s recourse is limited to the asset acquired with the borrowed funds, meaning if the SMSF defaults, the lender can only claim the property in the trust, not other SMSF assets. All income and expenses related to the property flow through the SMSF’s bank account, and the fund is responsible for meeting all loan repayments. Typically, SMSF loans require a larger deposit than traditional loans, often 20–30% of the property’s value.
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Advantages of Borrowing Through an SMSF
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It enables the fund to invest in higher-value assets, such as property, that might otherwise be out of reach with available cash alone.
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The income from the investment property, such as rent, can be used to help repay the loan, keeping the investment and its returns within the super fund.
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Interest expenses on the loan may be tax-deductible to the SMSF, potentially reducing the fund’s overall tax liability.
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The limited recourse structure protects other SMSF assets from lender claims if the loan defaults, helping to secure your retirement savings.
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Borrowing can help diversify the SMSF’s investment portfolio, improving potential income and long-term growth prospects.
The ATO has some expert tips on setting up and investing in a SMSF. Check out the following links:
Is an SMSF right for you?
How to set up an SMSF?
Professional advice is recommended, as SMSF lending is complex and must meet strict legal and compliance requirements. Only a limited number of lenders offer SMSF loans.
Give me a call to discuss SMSF options or refinance of an existing loan - 0477 712 161 or book a Discovery Meeting
The right home loan for your needs
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