A self-managed super fund can borrow to purchase property through a limited recourse borrowing arrangement — one of the most complex and heavily regulated loan structures in Australian finance. Getting it right requires a broker who understands both the lending and the superannuation compliance requirements.
Book a free consultationResidential SMSF property — purchasing a residential investment property within an SMSF using an LRBA, with a bare trust holding the asset during the loan term.
Commercial SMSF property — purchasing business premises or commercial property within an SMSF, including related-party transactions where the fund buys property from a member's business.
SMSF loan refinancing — refinancing an existing LRBA to a more competitive rate or structure, subject to compliance with the SIS Act bare trust requirements.
A limited recourse borrowing arrangement (LRBA) is a specific loan structure that allows an SMSF to borrow money to purchase a single acquirable asset — typically real property. The "limited recourse" element means the lender's recourse is limited to the asset being purchased; they cannot pursue the fund's other assets in the event of default.
The asset is held in a separate bare trust (also called a custodian trust) during the loan term, with the SMSF as beneficial owner. Once the loan is repaid, the legal title transfers to the SMSF trustee.
The rules around what the SMSF can purchase, who it can buy from, how improvements are handled and how rental income is managed are strictly governed by the ATO and SIS Act.
The SMSF trustee selects a property to purchase. It must meet the sole purpose test and cannot be acquired from a related party (with limited exceptions for commercial property).
A bare trust (custodian trust) is established by the SMSF's solicitor. The bare trustee holds legal title to the property during the loan term; the SMSF is the beneficial owner.
The lender assesses the SMSF's financial position — fund balance, contributions, rental income and member income used for repayments — and approves the loan to the bare trust.
Rental income flows into the SMSF and is used to meet loan repayments. Members may also make contributions to assist with repayments, subject to contribution cap limits.
Once the loan is fully repaid, the bare trustee transfers legal title to the SMSF trustee. The property is then owned outright by the fund.
SMSF loans have stricter eligibility requirements than standard investment loans — across both the fund and the property being purchased.
Most lenders require the SMSF to have a minimum balance of $200,000–$250,000 before they will consider an LRBA. This ensures the fund can service the loan and maintain adequate diversification. Some lenders set the threshold higher.
The property must be a single acquirable asset — it cannot be improved or renovated using borrowed funds during the loan term. Residential property cannot be purchased from or used by a related party. Commercial property can be leased to a related party at market rent.
A bare trust deed must be prepared by a solicitor before settlement. The bare trustee is typically a company established specifically for this purpose. Lenders require the trust documentation as part of the loan application.
Lenders assess serviceability using the rental income from the property plus member contributions and existing fund income. SMSF loans are assessed more conservatively than standard investment loans — with lower income recognition rates and fewer lender options.
SMSF loans for residential property are typically limited to 70–80% LVR (lower than standard investment loans). Commercial SMSF property is typically limited to 65–70% LVR. LMI is not available for SMSF loans.
The fund must be compliant with SIS Act requirements and have an up-to-date trust deed that specifically permits borrowing. Lenders require the most recent audited financial statements and ATO compliance notice as part of the application.
SMSF loans require close coordination between broker, accountant, solicitor and lender. We manage the lending side and liaise with your other advisers throughout.
We review the fund's balance, trust deed, compliance status and financial statements — identifying whether the fund is ready to borrow and which lenders are likely to approve the application.
We liaise with your SMSF accountant or financial adviser to confirm the strategy is appropriate, the trust deed permits borrowing, and the bare trust documentation is being prepared by a qualified solicitor.
We submit the full application — including fund documents, bare trust deed, property details and serviceability supporting information — and manage the lender's assessment through to formal approval.
We coordinate with the solicitor and lender for settlement, ensure title is correctly vested in the bare trustee, and review the loan annually to identify refinancing opportunities as the SMSF lending market evolves.
SMSF borrowing is one of the most compliance-sensitive areas of mortgage broking. Structural errors — wrong bare trust deed, incorrect property type, related-party breaches — can result in the fund losing its complying status, with severe tax consequences. We've been structuring SMSF loans since 2015 and work only with lenders and solicitors experienced in the space.
The number of lenders offering SMSF loans has reduced significantly since APRA tightened oversight of the sector. We know which lenders are currently active, competitive and reliable for SMSF applications — saving you time and avoiding declined applications that can affect your credit file.
A poorly drafted bare trust deed is one of the most common reasons SMSF loan settlements fall over. We work only with solicitors experienced in LRBA structures and review the trust documentation before lodging the application.
SMSF loans involve more parties than any other loan type — lender, broker, solicitor, accountant, SMSF auditor. We manage the coordination so you're not chasing four different professionals across a complex settlement.