Borrowing inside super, under rules built for it.
An SMSF loan lets a self-managed super fund borrow to buy a single property, commercial or residential, through a limited recourse borrowing arrangement, often called an LRBA. The fund makes the repayments, and the property is held in a separate trust until the loan is repaid.
SMSF loans are commonly used by business owners buying their premises through their fund, and by trustees building property inside super. The loan must be for the fund's investment purposes, as the lender and the law require, and whether borrowing suits your fund is a strategy question for your accountant or financial adviser.
We work with private and non-bank lenders who specialise in SMSF loans and limited recourse borrowing, and we stay across what they're funding right now. If your scenario fits, we can connect you with the lenders it suits.
Super funds generally can't borrow. The Superannuation Industry (Supervision) Act 1993 prohibits it, with a few narrow exceptions. The one that makes SMSF property loans possible was added in 2007, and nearly everything about how these loans look follows from it.
The fund buys a single acquirable asset, usually one property on one title. While the loan is outstanding, the property is held by a separate holding trust, sometimes called a bare trust, with the fund entitled to the income and the right to take legal title once the loan is repaid. The fund owns the property in everything but name.
The lender's recourse is limited to that property. If the loan goes wrong, the lender can take the property but can't reach the fund's other assets, which protects the rest of the members' retirement savings. It also explains why lenders are careful. Limited recourse limits the lender, not the lender's caution. Most also ask for personal guarantees from the members, which sit outside the fund.
There are rules on use, too. A business owner's fund can buy commercial premises used wholly and exclusively in the business and lease them back at market rent. Residential property can't be lived in or rented by members or their relatives. And borrowed money can repair or maintain the property, but not improve it into something different.
Whether an SMSF should borrow at all is a decision for the trustees and their adviser. Where funds do borrow, the loans usually fall into a few groups.
SMSF lending is specialist work, and fewer mainstream lenders do it than once did, which is why it's largely handled by private and non-bank lenders.
An SMSF lender is lending to a borrower with no salary. Repayments come from rent and contributions, so lenders look closely at the fund's balance, the members' contributions and the income the property will produce.
They'll also want the structure right: a trust deed that permits borrowing, a properly established holding trust, often a corporate trustee, and enough liquidity left in the fund after settlement that it isn't stretched from day one. The property matters too, particularly commercial security, where the lease and the tenant carry real weight.
Because the structure is regulated, most trustees work with their accountant or an SMSF specialist before and during the application, and lenders expect that. We don't advise on whether borrowing suits your fund. Once the strategy is settled, we find the lenders the scenario suits.
SMSF loans are generally priced above a standard investment loan. The reason is structural, not arbitrary: limited recourse means the lender can look to only one property, the extra trust and documentation add work for everyone involved, and fewer lenders are active in the space. Lower loan-to-value ratios are also common, so the fund puts in more of its own capital.
Getting indicative terms costs you nothing, and any fees are agreed with you up front, before any work starts.
This page is general information only. It isn't financial, credit or legal advice and doesn't take into account your particular circumstances. Lending decisions are made by the lender.
Pocket compass, 19th century Taking a bearing before setting out.
Across our lender network, SMSF loans go up to $5m. How much a lender will advance depends on the property, the fund's balance and liquidity, and how comfortably rent and contributions cover repayments.
It's the structure that lets an SMSF borrow to buy a single asset. The property is held in a separate holding trust until the loan is repaid, and the lender's recourse is limited to that property.
Commercial property used wholly and exclusively in a business can generally be bought by the fund and leased back to the business at market rent. The rules are strict, so trustees should get advice from their accountant or financial adviser first.
No. A residential property held by an SMSF can't be lived in or rented by members or their relatives. For a home loan in your own name, we don't arrange consumer loans at PLG, but our trusted brokers do.
Borrowed money can be used to repair or maintain the property, but not to improve it into a different asset. Trustees should confirm the position with their adviser before planning any works.
Most do. Guarantees from the members sit outside the fund and give the lender added comfort. Every lender has its own criteria, and the lender makes the credit decision.
Yes. Whether borrowing suits your fund is a strategy decision, and trustees should get their own advice from their accountant or financial adviser. Once the strategy is settled, we can connect you with lenders that suit the scenario.
