SMSF Loan in Melbourne

SMSF Loan in Sydney

Break Free Melbourne Home Loans are the best mortgage broker, with over 20 years of industry experience. We provide lending solutions and advice tailored to your needs. We work closely with clients as trusted advisors and are accessible to clients when needed.

Our brokers work hard at understanding our client’s unique circumstances and helping them overcome common home loan challenges. Whether you’re a first home buyer or an experienced investor, we’ll help you find the best home loan for your situation. Whether you’re self-employed and have trouble proving your income or you’re a contractor or casual worker, we offer solutions for all types of clients’ income sources.

Looking to finance an investment property with your super fund? These days, only a select few SMSF lenders still offer SMSF property loans. Work with an expert SMSF mortgage broker from Break Free Home Loans to find suitable products from specialist lenders. Whether you’re looking for an SMSF commercial property loan or an SMSF home loan, we can help. Talk to us today for more information on SMSF loans and discuss your needs to begin your loan application.

SMSF Loan in Brisbane

What Are SMSF Loans?

Aussie borrowers can tap into their SMSF loans to purchase investment properties. Self-managed super funds borrowing for property allows them to buy a new residential property or refinance an existing or newly built commercial space. With the investment property your SMSF mortgage finances, you’ll receive rental income and capital gains. This growth is then reinvested into your super fund’s retirement savings.

You can borrow money from your super fund to cover the cost of a property purchase. But you’ll need to get a special SMSF loan from a third-party vendor who offers SMSF lending. It’s getting harder to find a lender who offers these products, which is why working with a broker is the best way to find the best option for your needs.

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How Much Can I Borrow

Fortunately, the Australian government has established a system that regulates this practice. They’ve imposed a limited recourse borrowing arrangement on self managed superannuation funds. An LRBA green lights SMSF trustees to borrow money to buy property. This typically involves taking out a loan from a third party lender. The trustee then uses the funds to purchase an asset or a collection of identical assets with the same market value, which are held in a separate trust.

The main advantage of this approach is that if you happen to default on your mortgage, you’re liable to sell the property you’ve purchased while the other assets in your SMSF remain protected. So how much can you borrow with SMSF loans?

  • A limited recourse loan to buy residential property: An LRBA lets you borrow up to 75-80% of the property value.
  • SMSF commercial property loan: You can borrow up to 70% of the property value for standard commercial properties like office units.
  • Discounts: Some SMSF loans Melbourne lenders may add a margin to their usual residential loan rates, but these vary significantly from lender to lender.

Applying For SMSF Commercial Property Loan

The SMSF application process is similar to applying for property loans, but with more restrictions. SMSF mortgages are more challenging to process, with exorbitant fines of over $200,000 AUD for trustees if their arrangements aren’t structured correctly. As such, it’s always best to get advice from an experienced broker who can help you navigate these conditions. Want to ensure your retirement nest egg is safe? These are some essential steps you need to know when it comes to your SMSF property loan application:


Create your SMSF with a financial advisor or broker, who can advise you on the benefits of investing in properties through your funds.

Select the property you want to purchase. Like any investment, you need to take your time to research, considering every element carefully. This includes any potential capital gains, rental income and market value.
Who will be the custodian for the property? You must decide who holds the property title on your behalf until the loan repayments are fully paid off.
Submit your loan application with all the required documents.
The custodian will issue payment of the deposit. Contracts for the purchase are exchanged.

If the loan has been approved by the bank or lender, the custodian will place the property as collateral for the loan security. The lender can finalise the transaction.

You need to pay for any stamp duty and legal expenses that may arise.

Once you reach your loan settlement, you’ll begin making repayments, covering day-to-day expenses as well as collecting rent income. If the rent doesn’t offset the repayments, the difference will be paid off through your SMSF contributions.

When the loan has been paid off, the title can be transferred from the custodian to the SMSF. Alternatively, the property can be sold off.

Features Of SMSF Property Loans

When you work with SMSF loan experts, we can help you take advantage of the most critical features of an SMSF.
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Managing Investments

Managing your own investments is a key goal of an SMSF fund. Ideally, members want funds for their retirement so any investing activities need to directly benefit this outcome. You must keep personal business and financial matters separate from the fund.

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Managing Your Fund

As a super fund trustee, you need to be proactive in managing your funds. Make sure you keep excellent records of the projects your fund finances and you comply with the rules and regulations of lodging your annual returns.

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Accessing Funds

Once the release conditions are met, fund members are able to access SMSF funds. This can be at the time of retirement, otherwise known as the preservation age.

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Additional Contributions

Additional contributions from the trustees can usually be made. However, there are some limits imposed. This depends on how old the person is and their preset limits on the fund. You may be charged penalties for contributions exceeding the limit. This may vary from year to year.

About Tax Benefits In Melbourne

There are considerable tax benefits to owning an SMSF. It’s important to understand how your SMSF is taxed so you can create a good investment strategy to serve tax purposes.

Generally, the tax on income from a super is 15% for a complying fund and 45% for a non complying fund. The tax you need to pay on an income from an SMSF will vary based on the type of income it is. Contributions without a TFN are taxed at 46.5% for example. You may also be taxed higher amounts if you don’t comply with the super rules or if you’re earning income from other investments not connected to your fund.

Most capital gains tax are charged at 15% if you sell the property while you’re still investing into your super. If you hold onto it for a year, it will be taxed at 10%. If you sell the property when you’re receiving your pension, you will be exempt from this tax entirely.

When it comes to the tax system that applies to SMSF funds, it’s similar to individual tax with the exception of the different tax rate. All assessable income is combined and all allowable deductions are made to reach a taxable income figure. While you’re in the fund accumulation phase, this figure is normally taxed at 15%.

To make the most of your SMSF tax benefits, you need to keep accurate and up-to-date records to provide to the ATO. These records include:

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  • Annual audit: usually an independent audit of your fund and any assets from an approved auditor.
  • Annual tax return: prepare and submit a tax return for your fund each year.
  • Rollover benefits statement: if there are rollovers during the financial year, you need to submit a statement detailing this information.
  • Official fund changes: notify relevant authorities of any changes that were made to the fund in the financial year.

SMSF Home Loan Restrictions

You may be wondering if there are any restrictions on SMSF loans that prevent some transactions. In general, the following limitations apply to SMSF home loans:

  • There are no construction loans. SMSF funds can pay for renovations out of its own existing fund, but cannot use borrowed amounts for this purpose.
  • Refinance of existing SMSF loans is only available from select lenders.
  • Buying a property using your SMSF you mean to live in as a home is not allowed. Owner-occupied business premises are still acceptable.
  • Selling a residential property to your SMSF that you or a related party owns is not allowed. Selling a commercial property is acceptable.
  • When you borrow for your SMSF from banks, they have liquidity requirements.
  • Most lenders don’t accept applications for SMSF loans if the fund has less than $300,000 AUD in assets. Some lenders are less strict than others.
smsf loan in melbourne
smsf loan in melbourne

Use A SMSF Mortgage Broker To Help

With so few lenders offering SMSF loans as it is, you need to find the right deal to meet your needs. Speak to an experienced broker from Break Free Home Loans. We can help you analyse the cost and benefit of different products, helping you determine the profitability of various SMSF lending options. We can prepare relevant documents for your application, and work out if your intended transaction will comply with lender rules and government regulations. To make the best decision when it comes to financing your investment property with an SMSF loan, speak to our experts today.

Got Questions? Ask An Expert!

Our brokers are more than happy to answer your questions and assist you on your loan application. Talk to us today.

Frequently Asked Questions

The following are some of our most frequently asked questions when it comes to SMSF loans.

What Is A SMSF Commercial Property Loan?

SMSF commercial property loan is a type of finance you can access from your self managed super funds to buy an investment property.

How Much Can I Borrow With SMSF Commercial Loans In Melbourne?

With standard SMSF investment loans on residential properties, you can borrow up to 80% of the property value. Most lenders, however, will restrict your loan up to 75% of the property value. On commercial investments, you can borrow 70% of the property value on standard commercial properties like office units and up to 75% of the property for non-specialised securities.

Are The Any Restrictions On SMSF Loan?

  • There are no construction loans available.
  • Refinance on existing SMSF loans is only provided by a few lenders.
  • You cannot buy a property you intend to live in with an SMSF.
  • Selling a residential property to your fund that is owned by you or a related person is not allowed.
  • Banks have liquidity requirements.
  • Most lenders don’t accept SMSF loan applications if the fund has less than $300,000 AUD in assets.

Contact our team

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