SMSF property loans
How limited recourse borrowing works in practice.
SMSF Loan Calculator
Borrowing inside a self-managed super fund works differently. The fund, not you, has to service the loan from rent and contributions, and lenders want a larger deposit.
Is that number right for your situation?
A calculator applies one formula. Lenders apply their own, and they disagree with each other. Send us what you worked out and we will tell you how it looks against real lender policy.
- More than 60 lenders compared
- No fee to you
- A real answer, not a sales call
What makes SMSF lending different
An SMSF buys property through a limited recourse borrowing arrangement, which means the lender's security is confined to that single asset. If the loan defaults, the lender cannot pursue the fund's other assets. That protection is why lenders demand a larger deposit and charge more than on an ordinary investment loan.
The practical consequences: fewer lenders participate, loan to value ratios are typically capped around 70 to 80%, and the assessment focuses on whether the fund can service the loan from rent plus contributions rather than on your personal income.
The costs people underestimate
Running an SMSF carries annual audit and administration costs regardless of the property, and those come out of the fund before anything else. Add the property's own outgoings and the total is often higher than expected, which is why the costs field above matters as much as the rent.
Contributions are capped, so you cannot simply top the fund up if it falls short. A fund that cannot service the loan has limited options, because the property usually cannot be partially sold and the fund cannot borrow more against it.
Before you go any further
Whether an SMSF property purchase suits your retirement strategy is a financial advice question, and it needs a licensed financial adviser. We arrange the lending; we do not and cannot advise on the strategy.
What we can tell you is which lenders will consider your fund, what they will lend against, and what the structure has to look like to be acceptable. More on our SMSF property loans page.
Common questions
Commonly 20 to 30% of the property value, plus enough left in the fund to cover costs and maintain a liquidity buffer. Lenders generally want to see the fund retain a cash reserve after settlement rather than being fully committed.
No. Nor can a related party rent it, with limited exceptions for genuine business real property. Breaching this carries serious consequences for the fund.
Repairs and maintenance are permitted, but borrowed money cannot be used to improve the property in a way that changes its character. The rules are strict and worth confirming before committing to works.
Yes, generally, because of the limited recourse structure and the smaller number of lenders in the market. That is one reason comparing across a panel matters more here than on a standard loan.
Borrowing inside your fund?
A narrow field of lenders, very specific structures. We know which ones will look at it.
Related
Investment property loans
Buying in your own name instead.
Commercial property finance
Business premises, including through a fund.