SMSF Property Loans & Limited Recourse Borrowing
What is an SMSF Loan?
An SMSF loan allows your Self-Managed Super Fund to borrow money to purchase investment property, with strict compliance rules. The property is held in a trust and rental income contributes to loan repayments.
How Lend Dreams Can Help You
We ensure your SMSF loan meets all regulatory guidelines and is structured to protect your retirement savings. We work with lenders.
Things to Consider
Strict Lending Rules
SMSFs can only borrow under limited recourse borrowing arrangements (LRBAs), meaning the lender’s claim is limited to the property. These rules protect the fund but limit lender options.
Higher Deposit Requirements
Most SMSF loans require at least 20–30% deposit plus liquidity buffers in the fund. We help calculate the fund’s buying power based on current balances.
Limited Lender Pool
Only a small number of lenders offer SMSF loans. We work with specialist lenders who understand the legal and compliance side of SMSF lending.
Ongoing Compliance & Management
SMSF trustees must ensure the property investment complies with ATO regulations. We work closely with your accountant or planner to ensure the loan is set up correctly.
Borrowing inside super has its own rulebook
A self-managed super fund can borrow to buy property, but only through a specific structure, a limited recourse borrowing arrangement (LRBA), with the property held in a separate bare trust. Get the structure wrong and the fund can face serious compliance problems; get the order of operations wrong and you can be forced to unwind a purchase.
The lending market here is specialised: the major banks have largely left SMSF lending, and the active lenders each have firm rules on deposits, liquidity and property types. This is not a corner of the market to navigate alone.
How we handle SMSF lending
- Structure sequence done right: fund, bare trust and loan established in the correct order before contracts are signed.
- The lenders who actually do this: we work with the specialist funders active in SMSF lending and their current policies.
- Liquidity requirements planned for: lenders typically want the fund to retain a cash buffer after settlement; we build it into the numbers.
- Advice boundaries respected: we arrange the loan; whether an SMSF property strategy suits you is a matter for your licensed financial adviser, and we work alongside them.
SMSF lending questions, answered
Commonly 20–40% of the purchase price depending on property type, residential at the lower end, commercial higher, plus a liquidity buffer most lenders require the fund to hold after settlement (often around 10% of the property value in liquid assets).
No. Residential property owned by your SMSF cannot be lived in or rented by you, your family or related parties, at all. Commercial property is the exception: your own business can lease it from the fund at market rent.
The only structure through which an SMSF can borrow for property: the asset sits in a separate bare trust, and if the loan defaults the lender’s recourse is limited to that property, the rest of the fund is protected. It must be established correctly before the purchase.
Repairs and maintenance are fine, but borrowed funds cannot be used to improve the asset, no adding a bedroom with loan money. Improvements need to be funded from the fund’s own cash, within limits. It is one of several traps we flag before you buy.
Property in your super? Get the structure right before anything else.
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