SMSF (Self-Managed Super Fund) lending allows an SMSF to borrow money to purchase investment property through a Limited Recourse Borrowing Arrangement (LRBA). It is one of the most complex areas of Australian mortgage broking, requiring specialist knowledge of superannuation law, lender policy, and property ownership structures.
How SMSF loans work. The SMSF borrows funds from a lender, using those funds to purchase an investment property. The property is held in a separate bare trust (also called a holding or custodian trust) during the loan term. The lender’s security is limited to the property in the bare trust — they cannot access the SMSF’s other assets. Rental income flows into the SMSF at the fund’s tax rate (15% in accumulation phase).
Lender requirements. Not all lenders offer SMSF loans. The major banks largely exited SMSF lending between 2016–2019. Most SMSF loans are now provided by non-bank lenders and specialist SMSF lenders, typically at LVRs of 70–80% and at higher interest rates than standard investment loans.
Specialist broker knowledge required. SMSF loans require the broker to understand SMSF trust deeds, bare trust structures, the sole purpose test, ATO rulings on LRBAs, and the specific lender policies of the handful of active SMSF lenders. Most generalist brokers are not equipped for this niche — specialist SMSF brokers have dedicated knowledge and lender relationships.
Who benefits. Investors with large super balances who want to use their SMSF to hold residential or commercial investment property as part of a retirement income strategy.
