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Grow Your Super: Purchase Property with an SMSF Loan

Are you looking to take control of your retirement savings and invest in property through your SMSF? Whether you’re considering a residential investment or buying a commercial space for your business, an SMSF property loan could be the vehicle that gets you there.

SMSF Loan Diagram

What Is an SMSF Loan?

So, what is a SMSF loan exactly? In simple terms, it’s a loan taken out by a self-managed super fund (SMSF) to buy an investment property. But it’s not just any regular loan—it’s a limited recourse borrowing arrangement (LRBA), which means the lender can only access the property itself if the loan defaults—not the rest of your super fund.

An SMSF property loan allows your super to invest in real assets—like a house or commercial building—while leveraging borrowing power. It’s a smart strategy for diversifying your fund’s investment portfolio, and when done correctly, it can deliver strong long-term gains.

We specialise in helping clients structure compliant SMSF loans, giving you peace of mind and a clear path forward.

How Does a SMSF Loan Work?

You might be wondering—how does a SMSF loan work? It’s not quite the same as a typical home loan, but the process is straightforward when you’ve got the right team behind you.

  • You set up or review your SMSF to ensure it complies with ATO rules.
  • The SMSF identifies a property and applies for finance.
  • A bare trust (also called a holding trust) is set up to legally hold the property on behalf of the SMSF.
  • The lender assesses the application based on the SMSF’s financial position and investment strategy.
  • If approved, the loan settles and the property is managed by the SMSF as an investment asset.

SMSF loans are typically interest-only, with lower LVRs—usually around 70% for residential and slightly higher for commercial property. Structuring the deal right is key to staying compliant and avoiding costly pitfalls.

What Types of Property Can You Purchase with an SMSF?

This is one of the most common questions we get—what types of property can you purchase with SMSF funds? The short answer is: a surprising amount, if you play by the rules.

1. Residential Property

You can buy investment houses, apartments, townhouses—just about anything as long as it’s purely for investment. That means no living in it, and no renting it to related parties.

2. Commercial Property

This is where SMSF lending really shines. You can buy offices, warehouses, retail premises, or even your own business premises. Yes, your business can rent the property from your SMSF—at market rates, of course.

3. Special Use Properties

These include petrol stations, medical clinics, warehouses, and even childcare centres—subject to lender approval and compliance.

An SMSF commercial property loan can offer flexibility and potential tax advantages, especially for small business owners wanting to own their work premises.

Can You Refinance a SMSF Loan?

Absolutely—but it’s not always as easy as refinancing a standard home loan. So can you refinance a SMSF loan? Yes, and here’s when and why you might want to:

  • Your current loan rate is too high

  • You want to switch from interest-only to principal & interest

  • You’re looking to consolidate or restructure your SMSF assets

Lenders will reassess the SMSF’s financial position, rental income, liquidity, and the original loan structure. Valuations can be tricky, and not all lenders are equally comfortable with SMSF deals, so working with a broker (like us) makes all the difference.

Benefits of SMSF Property Loans

  • Greater Control: You choose the asset, the structure, the strategy.

  • Diversification: Add property to your fund’s investment mix.

  • Tax Efficiency: Rental income and capital gains may be taxed at concessional rates.

  • Retirement Income: Property can provide consistent rental income during retirement.

  • Business Opportunities: Buy your own commercial premises via your SMSF.

SMSF Loan Eligibility & Borrowing Power

Your SMSF can typically borrow up to 70%–80% of a property’s value, depending on the asset and the lender. Lenders will also want to see:

  • Sufficient fund contributions and rental income

  • A compliant investment strategy

  • Liquidity post-settlement (so your fund doesn’t end up “asset rich, cash poor”)

Commercial properties often have slightly different lending terms, and high-quality tenants or lease structures can improve your fund’s borrowing power.

SMSF Loan Process Checklist

We’ve simplified the process to make it easy for you:

  • Initial Consultation: Assess fund readiness and borrowing potential.

  • Pre-Approval: Conditional approval from lenders before you buy.

  • Property Selection: Choose an eligible investment property.

  • Bare Trust Setup: Establish the custodian structure.

  • Loan Application: Submit full application with supporting documents.

  • Loan Approval & Settlement: Funds disbursed, property purchased.

We’ll guide you every step of the way.

Common Pitfalls & How to Avoid Them

  • Buying before finance approval – SMSF lending takes longer than traditional loans.

  • Using the wrong legal structure – Mistakes in trust setup can lead to ATO headaches.

  • Insufficient liquidity – Your fund still needs to pay other expenses post-settlement.

  • Non-arm’s length dealings – Renting property to related parties at mates’ rates? Big no-no.

Avoiding these errors starts with expert advice and the right loan structure from day one.

Why Choose Us for Your SMSF Property Loan?

At York Finance, we’re specialists in SMSF lending. Whether you’re looking to acquire a residential investment or a commercial asset, we understand the nuance of compliance, tax impact, lender policy, and strategy. With access to major banks and boutique lenders alike, we’ll find a loan that suits your fund’s needs—and your long-term goals.

Frequently Asked Questions (FAQs)

1. What is a SMSF loan?
A loan used by a self-managed super fund to purchase property. It must be structured under a limited recourse borrowing arrangement.

2. How does a SMSF loan work?
Your SMSF borrows money to buy a property held in a bare trust. The loan is paid from super contributions and rental income.

3. Can you refinance a SMSF loan?
Yes, provided the new loan remains compliant and the lender is willing. It can help lower costs or adjust terms.

4. What types of property can you purchase with SMSF?
Residential (for investment only), commercial (including for business use), and specialised assets like medical clinics or childcare centres.

5. Can I live in a property owned by my SMSF?
No. It must be strictly for investment purposes and cannot be used by members or relatives.

6. Is a bare trust required?
Yes. It legally holds the property separate from the SMSF during the loan term.

7. How much can my SMSF borrow?
Usually 70–80% of the property’s value, depending on the lender and asset class.

Ready to Invest Through Your SMSF? Let’s Talk.

Our brokers specialise in SMSF property loans—both residential and commercial. We’ll walk you through the entire process and help structure a solution that works for your fund.

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