SMSF Property Purchases and Refinances: What You Need to Know
Self Managed Super Funds (SMSFs) have become an increasingly popular way for Australians to build long term wealth through property investment. Whether purchasing residential or commercial property, SMSF lending is a specialised area that requires careful planning and the right team behind you.
At Imperium Finance, we work closely with your accountant and financial planner to ensure your SMSF loan strategy complements your broader retirement and investment goals.
What You Can Purchase in an SMSF
An SMSF can purchase both residential and commercial property.
Residential property must be purchased purely for investment purposes, it cannot be lived in by you, your family, or any related party.
Commercial property, however, offers more flexibility. Many business owners choose to purchase their own premises through their SMSF and then lease it back to their trading entity at market rates. This strategy can be a tax effective way to build wealth inside your super fund while also giving your business security of tenure.
Typical Lending Limits
Lending limits (LVRs) depend on the property type. As at the date this blog was written, for residential properties, the majority of these specialist lenders will go to 80% LVR, and there is currently the ability to borrow up to 90% LVR. For commercial properties, the LVR is typically more conservative. These often cap out anywhere between 65-80% and are very much dependant on the security type.
Borrowing within an SMSF requires a Limited Recourse Borrowing Arrangement (LRBA), which means the lender’s recourse is limited to the property being purchased, therefore they cannot pursue other fund assets in the event of default. The lending is also heavily regulated by the ATO under the Superannuation Industry (Supervision) (SIS) Act 1993 as amended, and must comply with these regulations which is why it is important to engage with a financial planner who specialises in this particular area.
Because of this, lenders tend to assess SMSF loans conservatively, with close attention to serviceability and long term sustainability.
How Lenders Assess SMSF Serviceability
SMSF loan serviceability is typically based on:
Rental income from the investment property
Super contributions (employer and personal)
Fund expenses and existing investments
Some lenders require the loan to service solely from within the fund, using only rent and contributions. Others are more flexible and may allow servicing support from outside the fund, particularly for high net worth individuals or those with strong personal income streams.
This flexibility can make a significant difference in what the fund can borrow and the structure which best suits your overall financial position.
Why Refinancing Your SMSF Loan Can Be Worthwhile
Just like any other loan, SMSF loans should be reviewed regularly. Over time, interest rates and lender policies change, and just like standard mortgages, refinancing can deliver measurable benefits:
Improved cash flow within the fund
Access to more flexible loan features
Potentially lower rates, boosting long term fund performance
Alignment with updated contribution and investment strategies
Any savings achieved through refinancing directly benefit the balance of your super fund, helping you grow your retirement savings more efficiently.
Working With the Right Team
SMSF lending is complex, and compliance is key. That’s why collaboration between your broker, accountant, and financial planner is essential.
At Imperium Finance, we work with your professional advisers to:
Identify suitable lenders for your SMSF strategy
Review serviceability options and fund structure
Coordinate documentation to assist in meeting LRBA requirements
Ensure the loan supports your broader financial objectives
Final Thoughts
Purchasing or refinancing property within an SMSF can be an excellent way to build wealth and diversify your retirement portfolio, provided it’s done strategically and in line with superannuation regulations.
The right advice, the right loan structure, and the right lender make all the difference.
If you’re considering an SMSF purchase or want to review your current SMSF loan, speak with us today. We’ll work with your accountant and planner to help your super fund achieve its full potential.